Full text of "The principles of industrial management"

See other formats

! ll ii
•i !!

IK ! I'h!'."

1^'

T^"^ an th* ipst date stamped below.

\ "^ ^

THE PRINCIPLES OF
INDUSTRIAL MANAGEMENT

THE PRINCIPLES
OF INDUSTRIAL
MANAGEMENT

JOHN C. DUNCAN, M.S., Ph.D.

ASSISTANT PROFESSOR OF ACCOUNTANCY,
UNIVERSITY OF ILLINOIS

NEW YORK AND LONDON
D APPLETON AND COMPANY

1920

^A ^n Q

PRINTED IN THE UNITED STATES OE AMERICA

lis

THIS BOOK IS DEDICATED
TO ITS TWO
MOST INTERESTED WELL-WISHERS-

MY PARENTS

PREFACE

The writer has long felt the need of a scientific treatment
of industrial management. Hundreds of young men are now
in our schools and colleges intending to engage in the world
of affairs, and it is exceedingly important that they gain a
clear conception of the principles underlying the successful
conduct of industrial enterprises.

The material in this book is gathered from many sources.
Merely to mention the people to whom the author is indebted
for data within these covers would fill several pages with
names. The writer has endeavored to give full credit in the
text for the drawings, plates, and diagrams, and, unless ac-
cidentally overlooked, all books and articles from which he has
received assistance have been cited. In the text, however,
there is no mention of his obligations to Judge Elbert H. Gary
and Mr. Richard Trimble, of the United States Steel Corpora-
tion, to Mr. Wm. Laughlin, of Armour and Company, Mr. H.
C. Folger, Jr., of the Standard Oil Company, Mr. E. Collins,
Jr., of the Sauquoit Silk Manufacturing Company, Mr. L.
A. Osborne, Vice-President of the Westinghouse Electric and
Manufacturing Company, and Mr. H. E. Neise, of the Amer-
ican Sugar Refining Company; so he takes this opportunity
to thank them for their many favors. He is further indebted
to his colleagues in the departments of Economics and Engi-

viii PREFACE

neering of the University of Illinois, to his former associates
at the University of Pennsylvania and Ohio State University.
Professors E. H. Waldo and E. L. Bogart, his colleagues
at the University of Illinois, have been very helpful; the
former read all the chapters pertaining to the engineering
matters, in addition to many of the others. Professor Emory
R. Johnson, his former teacher at Pennsylvania, read the
entire manuscript, and made many improvements in style
and expression. This paragraph would be incomplete with-
out special mention of his sister, to w^hom the writer is
indebted for the work of preparing the manuscript for the
printer. In addition to that onerous task she has given
many suggestions as to form, expression, and selection of
contents, which have been of very great assistance.

In registering his thanks, however, the writer does not
wish to have anyone but himself blamed for any deficiencies
which exist in the volume, as the plan and treatment are his
own.

It is his hope that the book will be of service to the stu-
dents of accountancy as well as to those of general business.
The accountant should have knowledge of more than the

*inere methods of making entries in books and the drafting
of financial statements therefrom. He should be able to
appreciate the kind of information which the management
needs, and the extent to which accounting records can gather
the various types of information. The book is written to

_giveJboth the accountant and the general student of business
a brief presentation of the underlying principles of the sci-
ence of management.

In teaching the subject the writer has found it exceed-

PREFACE ix

ingly helpful to the instructor and profitable to the student
to have frequent visits to modem plants and then have care-
fully written reports presented which discuss those factors
which contribute to the success of the enterprise or tend to
its failure. Such trips should be made with the teacher or
with some competent guide, and may well be made the basis
of interesting class-room discussion.

John C. Duncan.
University of Illinois, Urbana, III.

CONTENTS

PART I.— THE ECONOMIC ENVIRONMENT
CHAPTER I

THE PROBLEMS

PAGES

Introduction — Factors Affecting Prosperity of Plant — Eco-
, nomic Environment — Manufacturing and Distributive
\ Policy — Organization and Management — Problems of
) Business Management: (1) Location of Plant; (2)
/ Integration and Concentration of Business ; (3) Special-
ization ; (4) Building ; (5) Power ; (6) Management ; (7)
Selling 3-4

CHAPTER II

GENERAL THEORY OF INDUSTRIAL LOCATION

Survey of Concentration and Localization of Industries —
Reasons for Localization — Census Classification : (1)
Materials ; (2) Market ; (3) Water Power ; (4) Climate ;
(5) Labor Supply ; (6) Free Capital ; (7) Early Start-
Four Primary Reasons for Localization : (1) Market ; (2)
Raw Materials; (3) Labor; (4) Power — Importance of
Latter Factors 5-23

CHAPTER III

THEORY OF PLANT LOCATION

Factors Other than the Ideal Industrial District Affecting:
Success of Plant — Location, Layout, Equipment — Loca-
tion with Respect to Selling, Buying, Manufacturing —
Importance of Nearness to Labor Population, Repair
Shops, Banking and Credit — Considerations Affectinjfr

xii CONTENTS

PAGES

Building of Plant: (1) Special Needs of Industry; (2)
Space for Expansion ; (3) Low Rent and Taxes ; (4)
Freedom from Restrictive Ordinances; (5) Adequate
Fire-Fighting Facilities 24-38

CHAPTER IV

THE IDEAL SITUATION

Country, City, and Suburban Plant Situations — Advantages
and Disadvantages — Location of Plants Suited to Each
Kind of Situation — Extra Inducements Offered: (1)
Free Land; (2) Free Building; (3) Exemption from
Taxation ; (4) Stock Subscription ; (5) Cash Bonus ; (6)
Miscellaneous Favors — General Rules for Location in
Any Situation 39-48

CHAPTER V

BUSINESS CONCENTRATION AND INTEGRATION

Classes of Consolidations: (1) Integration of Process from
Raw Material to Finished Product ; (2) Integration and
Concentration of Factories ; (3) Integration and Con-
centration of Distributing Houses ; (4) Integration by
By-Product Utilization ; (5) Integration and Concentra-
tion by Control of Patents and Market Ownership —
Illustrations of Each Form of Consolidation Showing
Types of Integration and Concentration Used — Deter-
mination of the Advisable Type of Consolidation. . 49-70

CHAPTER VI

BUSINESS SPECIALIZATION

Growth of Specialization — Reasons : (1) Reduction of Prelim-
inary Cost ; (2) Use of Specialized Equipment ; (3) Sim-
plification of Managerial Problems ; (4) Greater Value
of Small Savings — Illustrations of Methods of Saving—
The Interchangeable Part — Limitations to Specializa-
tion. 71-80

CONTENTS xiii

PART II.— THE EQUIPMENT OF THE PLANT
CHAPTER VII

CONTINUOUS INDUSTRIES, SYNTHETICAL

PAGES

Determination of the Type of Plant— Two Kinds of Manu-
facturing : (1) Continuous ; (2) Assembling — Classes of
Continuous Industries : (1) Synthetical ; (2) Analytical
— A Continuous Synthetical Industry of Non-By-Product
Type — Effect upon Plant Structure — A Continuous In-
dustry of By-Product Type— Effect upon Plant Struc-
ture 81-100

CHAPTER VIII

CONTINUOUS INDUSTRIES, ANALYTICAL

Utilization of Cheap Conveying Apparatus by Analytical In-
dustries— Two Types of Analytical Industries, Non-By-
Product and By-Product — Non-By-Product Industry,
Sugar Refining — Characteristics of a Sugar-Refining
Building — Utilization of Gravity — Conveying Apparatus
in Flour Milling — By-Product Analytical Industry, Meat
Packing — Steps of the Process — Ideal Layout for a
Packing House 101-114

CHAPTER IX

ASSEMBLING INDUSTRIES

Two Groups of Assembling Industries : (1) Direct Pro-
ducing; (2) Indirect Producing — Characteristics of As-
sembling Industries — Two Questions in Assembling
Plant Layout: (1) The Arrangement of Departments;
(2) The Building of the Plant— Direct Producing In-
dustry: Shoe Manufacturing — Ideal Layout — Indirect
Industry : Ship Building — Type of Machinery and Equip-
ment Needed — Ideal Layout for a Machine Shop and
Foundry — Ideal Layout for a Ship Building Establish-
ment 115-134

xiv CONTENTS

CHAPTER X

FIRE PRECAUTION, AND ITS EFFECT ON LAYOUT AND STRUCTURE

PAGES

The Ideal Plant — Large Changes in Plant Layouts Neces-
sitated by Fire Precautions : (1) In Oil Refineries ; (2)
In Gas Works — Causes of Fire : (1) Common Hazards ;
(2) Special Hazards — Fire Protective Devices: (1) Pre-
ventives of Fire ; (a) Slow^-Burning and Fire-Proof
Structures ; (2) Fire Extinguishers : (a) Automatic
Sprinklers, (b) Fire Hose, (c) Fire Buckets, (d) Chem-
ical Extinguishers, (e) Hand Buckets; (3) Fire Alarms:
(a) The Watchman and the Time-Recorder, (b) Ther-
mostats— Outside Fire Protection: (1) Water Curtains;
(2) Fire Hydrants ; (3) Fire Alarms ; (4) Fire Engines
— Safety Devices for the Protection of Life: (1) Fire
Escapes ; (2) Fire Drills 135-152

CHAPTER XI

THE BUILDING AND THE WORKERS

Five Essentials to Comfort: (1) Light; (2) Heat; (3) Ven-
tilation ; (4) Space ; (5) Conveniences — Lighting : (1)
Skylight ; (2) Windows ; (3) Saw-Tooth Lights ; (4) Arti-
ficial Light; (5) Elimination of Shadows — Heating: (1)
Hot Air ; (2) Hot Water ; (3) Steam ; (4) Combination
of Hot Air and Steam — Humidifiers — Schemes for Ven-
tilation— Importance of Sufficient Space — Toilet and
Wash Rooms 153-162

CHAPTER XII

THE POWER PROBLEM

Water Power — Advantages of Purchased Power — Other
Forms of Power — Direct Combustion and Indirect Com-
bustion Engines — The Gas Engine — Two Types of
Steam Engine: (1) Turbine; (2) Reciprocating — Econ-
omies in a Steel Plant: (1) Making Water Suitable for
Steam ; (2) Increasing Boiler Efficiency ; (3) Increasing
Engine Efficiency — Comparison of Boiler Compounds

CONTENTS

PAGES

with Water Softeners — Economizers and Superheaters —
The Automatic Stoker — The Condenser — Kinds of Power
Transmission: (1) Steam; (2) Belt; (3) Rope Drive;
(4) Electrical ; (5) Air Pressure 163-180

PART UI.— ORGANIZATION AND MANAGEMENT
CHAPTER XIII

THE THREE TYPES OF ORGANIZATION

Duties of the Ideal Manager — Three Types of Management :
^I) Military; (2) Functional; (3) Departmental — Ad-
vantages and Disadvantages of Each Type. . . 181-195

CHAPTER XIV

THE LABOR FORCE

Three Kinds of Laborers : (1) Men ; (2) Women ; (3) Chil-
dren— Male and Female Labor Compared — Children as
Employees — Classes of Labor from Standpoint of Edu-

.cation and Training — Apprenticeship Systems — Baldwin

Locomotive Works — Westinghouse Manufacturing Co. —
.Advantage in Training Apprentices 196-213

CHAPTER XV

THE PAYMENT OF THE WORKMAN

Obtaining the Maximum Product — Systems of Wage Pay-
ment: (1) Time; (2) Piece; (3) Gain Sharing; (4)
Premium ; (5) Halsey and Rowan Modifications ; (6)
Differential Piece Rate; (7) Emerson; (8) Bonus — Dan-
ger of Cheap Labor 214-232

CHAPTER XVI

RECORD OF THE WORKERS

Necessity of Accurate Records — Work of the Labor Bureau:
(1) Selection of Employees; (2) Record of Their Status
— Necessity of Considering an Employee's Health, Age»

xvi CONTENTS

PAGES

Education, and Experience — Sources of Information —
The Form Letter — Qualifications of a Good Employee:

(1) Regular Attendance ; (2) Diligence ; (3) Efficiency —
Time-Recording Systems: (1) Inboard, Outboard Check;

(2) Drop Box Check; (3) Call Number; (4) Distribution
Check ; (5) Recording Clock — Proof of Each System's
Accuracy— Record of Spoiled Work 233-261

CHAPTER XVII

RECORD OF RAW MATERIALS

Direct and Indirect Materials — Care of Raw Materials: (1)
Prevention of Waste and Losses on Direct Material ; (2)
Prevention of Undue Expenditures for Indirect Material
— Consideration in Developm.ent of the Greatest Econ-
omy: (1) Market; (2) Quality; (3) Quantity; (4)
Delivery; (5) Housing; (6) Waste; (7) Losses — Depart-
ments: (1) Purchasing; (2) Testing; (3) Receiving and
Store-room — The Perpetual Inventory — Arrangement of
Stock — Prevention of Waste and Loss — Requisition
Scheme— The Budget System 262-280

CHAPTER XVIII

RECORD OF FINISHED AND UNFINISHED GOODS

Necessity for Record of Unfinished Goods — Two Kinds of
Manufacturing: (1) For General Stock; (2) For Specific
Contract — Accurate Records of Partly Finished Goods —
The Production Order — The Summary Cost Sheet — Rela-
tion to the Production Order 281-293

CHAPTER XIX

RECORD OF EQUIPMENT

Divisions of Equipment: (1) Tools; (2) Patterns; (3) Draw-
ings and Plans ; (4) Power Machinery — Arrangement
and Classification of Tools — Record of Patterns — Record
of Drawings — Dewey Decimal System — Record of Ma-
chines— Types of Recording Instruments — A Machine
Inventory for Fire Purposes 294-316

Index ... . 317

LIST OF ILLUSTRATIONS

PAGE

Map of the United States Showing Value of Products of

Manufactures per Square Miles in 1900 7

Map of the United States Showing Distribution of the

Population in 1900 19

Map of a Portion of the City of Philadelphia 27

Map of the Carnegie Company Plants 29

Map of the United States Showing Properties of Sub-
sidiary Companies of United States Steel Corporation

in 1908 Facing 52

Map of the United States Showing Refineries of the Standard

Oil Company and its Competitors 60

Diagram of Cotton Manufacture 86

Diagrams of Two Types of Cotton Manufacturing Plants 90

Diagram Showing the Steps in Steel Making 93

Plan of the Steel Plant at Gary, Indiana 96

Sugar Refinery Scheme 104

Plan of a Sugar Refinery 106

Plan of a Packing House Ill

Bird's-Eye View of the Plant of Armour & Co Facing 112

Shoe Manufacturing 123

Horizontal Boring, Milling, and Drilling Machine 129

Plan of a Shipyard 132

Bird's-Eye View of an Oil Refinery Facing 136

Elevation and Plan of Slow-Burning Construction 143

A Remarkable Fire Test Facing 145

Interior of a Machine Shop Facing 154

A Ventilation and Heating Plan 157

Inside View of the Eureka Water Softener 171

Comparison of the Time-Rate and Piece-Rate Systems 217

Comparison of Halsey and Rowan Premium Plans 222

Taylor Differential Piece-Rate System 226

Emerson Differential Piece-Rate System 228

^ xvii

xviii LIST OF ILLUSTRATIONS

PAGE

Recording Clock with Cost Equipment 243

Workmen's Monthly Time Book 245

Daily Analysis Sheet 246

Daily Time Distribution Ticket 247

Monthly Time Cost Sheet 248

Individual Contract Time Slip 249

Non-Detachable Contract Time Record Tag 250

Detachable Contract Time Record Tag 252

Individual Operation Time Slip for each Contract 253

Monthly Wage Record of Piece-Worker 254

Monthly Memorandum Card Showing Efficiency of Piece-
worker 255

Individual Spoiled Work Ticket 256

Permanent Record Card of Employees 257

Report Summarizing Spoiled Work of Entire Plant by Depart-
ments 258

Chart of Errors Showing Monthly Efficiencies of Departments 259
Detailed Monthly Spoiled Work Report for each Department 260
Index Record for Keeping Track of Customers and Wearing

Qualities of Raw Materials 265

Purchase Record Used to Determine Source of Defective Raw

Material 267

Raw Material Stock Record 269

Works Requisition on Store Room 274

Budget Blank for a Machine Shop 278

Record Slip Showing Amount of Goods which Passed Through

a Department in Bulk 284

Combined Cost Ledger and Partly Finished Goods Record for

Goods which Pass Through Departments in Bulk 286

Partly Finished Goods Record 288

Combined Partly Finished Goods Record and Cost Ledger 290

Combined Sales Record and Finished Goods Inventory 292

Pattern Record Card 302

Record Card of a Bristol Automatic Time Recorder 307

Chart of a Bristol Recording Thermometer in a Heating Plant 309

Records Showing Output of Machines 311

Machinery and Equipment Record Card 313

Plat Record of Machinery and Equipment 315

PART ONE
THE ECONOMIC ENVIRONMENT

CHAPTER I

THE PROBLEMS

Industrial plants and business houses of various kinds
grow and decay. Industries prosper in some sections of the
country, while in others they have either failed or are living
a miserable existence. The census reports at times show
certain territory having a most remarkable development in
production which a decade before was unknown in the manu-
facturing world. Within the same area industries pass from
one set of owners to another. Frequently within a genera-
tion, unknown workmen advance to the proprietorships of
plants. Great establishments, whose positions were once
impregnable and whose influences were enormous, have lived
to see their power pass to other concerns prospering under
different regimes.

Why do industries move from one section of the country
to another? Why is it that firms in the section wherein the
industries are located rise and frequently fail after having
built up a large business and established a national or even
world-wide reputation?

The prosperity of an enterprise depends in general upon
four factors :

1. The economic environment.

2. The equipment of the plant.

8. The organization and management of the plant.

4. The selling department.

The economic environment provides convenient situations
which make possible the cheap production and profitable
disposal of the goods.

4 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The equipment of the plant provides shelter for the em-
ployees and the tools, and also supplies mechanical means
by which the raw materials can be changed into salable
products.

On the organization and management of the plant depend
the owners' ability to utilize to the best advantage their raw
materials and the time of the men they employ.

The selling department makes an outlet for the goods.

The successful running of a concern resolves itself into
ten problems :

1. Where shall the plant be located?

2. To what extent shall the business be integrated and
concentrated?

3. To what extent shall the enterprise be specialized?

4. How shall the plant be built?

5. What form of power shall be employed to run the
plant?

6. What shall be the basis of its internal organization?

7. How shall the labor force be handled?

8. How shall the raw materials be treated?

9. How shall we determine the efficiency of our equip-
ment?

10. How shall the goods be distributed to the consumer?
This volimie will confine itself to the discussion of the

industrial problems, hence it will consider only the first nine
of the above questions. The tenth is so important that it
can be adequately handled only by making it the special
topic of another treatise.

CHAPTER II

GENERAL THEORY OF INDUSTRIAL LOCATION

The census report of 1905 shows that the United States in
that year produced nearly $15,000,000,000 worth of manu-
factured goods. ^ If we tabulate the fifteen most productive
states in the order of their rank, we find that they arrange
themselves as follows:

Rank. State. Value of Products. Rank. State, Value of Products.

1 New York $2,488,345,579 9

2 Pennsylvania.. 1,955,551,332 10

3 Illinois 1,410,342,129 11

4 Massachusetts. 1,124,092,051 12

5 Ohio 960,811,857 13

6 New Jersey... 774,369,025 14

7 Missouri 439,548,957 15

8 Michigan 429,120,060

Total for 15 States $11,876,919,313

If we exclude California and Missouri from the list, we
find that the total productivity is reduced by little more than
$800,000,000, and that three fourths of the entire manu-
factured goods in the United States are made within states
having a total area of less than 450,000 square miles, less
than one seventh of the entire area of the United States,
excluding our insular possessions.

If we make an analysis by industrial districts, the fact is
brought out still more prominently, as shown by the follow-
ing table.

^ Statistical Abstract of the United States^ 1909, pp. 192, 193.

Indiana

393,954,405

Connecticut . . .

369,082,091

California

367,218,494

Minnesota

307,858,073

Maryland

243,375,996

Rhode Island..

202,109,583

6 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

AREA, POPULATION AND VALUE OF MANUFACTURING
PRODUCTS FOR THIRTEEN SELECTED INDUSTRIAL
DISTRICTS, 1905.1

Industrial District.

Area in
Sq. Miles.

Population.

Value of Products.

New York 2

Chicago

Philadelphia

Boston

Pittsburg and Alleghany.

St. Louis

Baltimore

Cincinnati

Cleveland

Buffalo

Minneapolis and St. Paul

San Francisco

Providence . . .».

Total

702
500
501
502
198
206
246
151
200
201
155
203
154

5,294,682
2,116,0003
1,688,0003
1,354,653
722,0003
716,0003
610,0003
498,0003
492,000 3
423,390
472,362
480,000^
344,521

>, 144,488,093
970,974,280
677,781,117
457,254,360
383,490,468
319,709,859
202,659,272
203,095,605
179,184,277
168,111,658
161,803,453
159,033,080
156,299,965

3,919

15,211,608

5,183,885,487

Less than four thousand square miles of territory, con-
taining about 15,000,000 people, produced more than $6,000,-
000,000 worth of manufactured goods out of the total United
States production of $15,000,000,000. One per cent of the
area of the country, and less than twenty per cent of the pop-
ulation, created forty per cent of the manufactures.

A careful study of the map on the opposite page (Fig. 1)
will give some idea of the way industries are concentrated

^ Adapted from Census Bulletin No. 101, Industrial Districts,
1905, p. 10. In every instance the city named includes many sub-
urbs and surrounding towns.

2 New York includes Jersey City and Newark, N. J. , and the
surrounding towns in New Jersey.

3 Writer's estimate based on Statistics of Cities Having a Pop-
ulation of Over 30,000, Special Reports, Bureau of Census.

* Based on estimates of 1904, as reported in Table 1, pp. Ill to
113, Statistics of Cities Having a Population of Over 30,000, Special
Reports, Bureau of Cen^xi^

8 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

into certain localities in the United States. The Industrial
United States includes the section north of the Ohio River
and the Mason and Dixon Line, and east of the Mississippi
River, with smaller sections like the Birmingham district in
Alabama, the Pueblo district in Colorado, and Kansas City
in Kansas and Missouri.

The distribution of industries from the standpoint of the
nature of the industry, shows that this great district has
within it very marked divisions.

The little state of Rhode Island ranks first in the produc-
tion of silverware and jewelry, second as a manufacturer of
worsted goods, third in dyeing and finishing textiles, fourth
as a maker of cotton goods. Connecticut is first in the
production of eleven articles, .t}^ical products of which are
needles and pins, ammunition, brass work, corsets, hard-
ware, and cutlery. Massachusetts is preeminently a shoe
and textile state. It ranks first in the production of cotton
goods, woolens, and all kinds of shoe products. New York
holds the record with twenty-nine first places, including
clothing, furniture, men's furnishing goods, gas, paper and
wood pulp, printing and publishing, sugar refining, and a
number of other less important industries. New Jersey is first
in dyeing and finishing textiles, as a producer of silk and silk
goods, and as a manufacturer of sewing machines and attach-
ments. Pennsylvania holds first place in nine departments
<)f industrial activity, among which are carpet and rug man-
ufacturing, cars, coke, foundry and machine-shop products,
glass, iron and steel, petroleum refining, and leather tanning.
It takes second place in the rranufacture of silk goods, print-
ing and publishing, women's clothing, electrical apparatus,
hosiery and knit goods, lumber and planing-mill products.
In the refining of sugar it ranks third. Illinois has six firsts,
including meat packing, agricultural implements, bicycles,
glucose, and distilled liquors. Ohio has three firsts — clay
jproducta, carriages and wagons, and carriage and wagon

GENERAL THEORY OF INDUSTRIAL LOCATION 9

materials; is second in iron and steel, and third in foundry
and machine-shop products. The great flour state is Minne-
sota, with New York ranking second and Ohio third.

Within recent years, the Southern States have become
important in the production of certain lines of goods. Ala-
bama is now fifth in the list of the iron and steel states,
while in the manufacturing of coke it gives place only to
Pennsylvania. South Carolina ranks second in the produc-
tion of cotton goods, with North Carolina a close third, both
having outclassed many northern rivals within a decade, and
both states are still gaining.

The Industrial map (Fig. 1) shows that political boimd-
aries are not recognized in the world of production. East-
em Pennsylvania is industrially different from western Penn-
sylvania. The great forests in the states of Wisconsin,
Michigan, and Minnesota naturally give them first, second,
and third rank respectively as producers of lumber and timbei
products. Alabama's development in iron and steel is read'
ily accounted for because of its vast deposits of ore and coal,
but the Southern States contain the only cotton-producing
districts in the country, yet the greatest cotton-manufacturing
state is Massachusetts. Illinois kills more cattle than any
other state, yet Pennsylvania takes first rank in tanning,
while Massachusetts is second. New York third, and Illinois
seventh place. Montana is the greatest producer of raw wool
in the country, yet Massachusetts makes more woolen and
worsted goods than any other state in the Union. Pennsyl-
vania and Ohio are the two greatest coal and natural gas-
producing states in the land, yet New York is first in the
production of gas for illumination and heating purposes.
Forty years ago, Pennsylvania was a great iron and steel
producing state, because of the great productivity of the iron
works in its eastern portion. To-day eastern Pennsylvania
is relatively unimportant in the iron and steel business. A
generation ago Ohio imported almost all of its shoes from

10 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the east. To-day Ohio is one of the great ehoemaking states
in the Union, giving place only to Massachusetts, New York,
and New Hampshire.^ A score of other instances might be
cited wherein industries have changed their location. It
becomes evident, therefore, that there must be a number of
factors which influence industrial location.

The twelfth census mentions seven factors which give rise
to the localization of industries : ^

"(1) Nearness to materials, (2) Nearness to markets,
(3) "Water power, (4) Favorable climate, (5) A Supply of
labor, (6) Capital for investment in manufactures, (7) Mo-
mentum of an early start. "

AVhile all of these causes contribute to industrial location,
there are but four primary factors, viz. : (1) Markets, (2)
Iiaw materials, (3) Labor, (4) Power.

Climate, although sometimes important, as a rule has
little influence in determining location, unless it acts in con-
junction with some or all of the four primary factors, because
artificial means can betaken to make a manufacturing estab-
lishment come up to nearly any requirement of heat, cold, or
moisture.

The supply of capital and the momentum of an early start
each have an important influence, but they are secondary
factors, because some or all of the four primary factors must
be present in order to give the initial impetus.

Generally speaking, the most important factor in the
determination of any industrial location is the market, for
without a means of disposing of the goods, a business could
realize no profits. Consequently industries locate near the
markets when no other factors are to be considered. This is
noticeable in the iron industry in the United States. In the

1 Twelfth United States Census 1900, Vol. VII, Manufactures,
Part 1, Table LXXVI, pp. clxxxiv to clxxxvii.
* Ibid., pp. ccx-ccxiv.

GENERAL THEORY OF INDUSTRIAL LOCATION 11

early history of the country the great consuming centers for
iron were the cities and districts scattered along the Atlantic
coast. Boston, New York, Philadelphia, Baltimore, and
many other smaller to^\Tis were the iron users. The Eastern
States had then, and still have, considerable deposits of
valuable iron ore. The Schuylkill Valley was an especially
favored district in ttiat respect. It possessed access to iron
ore, anthracite coal, and limestone. Blast furnaces, rolling
mills, and other kinds of iron works filled the entire valley.
A great nmnber of the subsidiary industries found a profita-
ble situation in that locality. The Schuylkill Canal offered
cheap water transportation for the iron to Philadelphia, from
which city it was easily distributed by rail and water to the
consuming points along the eastern coast.

Sixty years ago, people knew that western Pennsylvania
had rich deposits of iron ore, coal, and limestone. In 1856,
no less than twenty-one furnaces in Pennsylvania had demon-
strated that the western coals could be used for iron making. ^
Long before that time, however, nature had, by the gift of an
ideal location, destined Pittsburg to be the great iron city.
Three navigable rivers make a fortune building trinity for
Pittsburg. Two streams, flowing from opposite directions,
bring the raw materials together at a point where they can
readily be changed into finished products ; while the third
river, formed by the union of the other two, flows through
one of the richest valleys in the world, and affords a natural
highway for the distribution of iron products. The develop-
ment of the Ohio Valley has also been hastened by the pres-
ence of gas, which supplied the most perfect fuel known for
the mere cost of tapping the ground.

After the Civil War, the great extension of railways
through the West made such a tremendous market for iron
and steel products that Pittsburg, with its favorable location,

* Cf. Tenth United Stata^ Census, ^t^tistica of ManufactureSj^
Uqh ftnd StX^^l, fi. 118.

12 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

became known the world over as the Iron City. Indeed, the
great demands of the railroads for rails caused eastern man-
agers and proprietors to start plants west of the Alleghenies.
In the early nineties the Lackawanna Steel Company moved
its entire plant from eastern Pennsylvania to the lower lake
port of Buffalo.

Second in importance to the market for the development
of an industry is the location of the raw materials. Pitts-
burg was not a great iron city until it had a market outlet.
The Schuylkill Valley failed to produce steel and iron for the
West, because the situation of Pittsburg in relation to the
raw materials is far superior to that of eastern Pennsylvania.
It costs less as a rule to transport finished steel products than
it does to transport the raw materials, notwithstanding the fact
that freight rates on finished goods are usually much higher
than on raw materials. The reason for this is that a compa-
ratively small percentage of the raw material is transported
when the product is completed. To manufacture one ton of
pig iron, the Edgar Thomson Plant of the Carnegie Steel
Company, Pittsburg, requires in their blast furnace 17 cwt.
of coke, 10 cwt. of limestone, and 32.2 cwt. of iron ore.^
In other words, to transport raw material to within a prox-
imity of the market requires the paying of freight on two
and one half tons of material, of which only one ton is
salable.

If a market is accessible and all other things are equal,
a plant, to secure its greatest advantages, will always find it
desirable to locate near raw material, where raw material is
an important element in the cost.

In 1852, there were shipped from Marquette, Mich., six
barrels of iron ore.^ The amount was insignificant, but

* "An Outline of the Metallurgy of Iron and Steel," by A.
Humbolt Sexton, p. 146.

2 "The Honorable Peter White," by Ralph D, Williams, p. 57,
The Penton Publishing Coropanyi 1905,

GENERAL THEORY OP INDUSTRIAL LOCATION 13

it was the forerunner of one of the most important develop-
ments in the iron and steel industry. It revealed to the
world a source of raw material that was destined to give the
United States first rank in this field. By 1889, the Lake
Superior region produced more than seven and one half
million tons of ore out of the fourteen and one half million
total of the United States. ^ In 1907, nearly 52,000,000 tons
of ore were produced in this country; and, of that quantity,
the upper lake regions contributed nearly 42,000,000 tons.^
The source of the raw material is 1,000 miles from Pittsburg,
yet the deposits are so situated and so rich, and the lakes
afford such excellent means of transportation that the total
cost of mining and of carrying the ore to Pittsburg is less
than $2.00 per ton. After paying all the expenses, provid-
ing for reserves and sinking funds, these ores sell in the
Lower Lake Ports for from $4.00 to $5.00 per ton, depending
on their quality.^

Why did not the cities about the Northern Lake become
great manufacturers of iron products when they have such
great deposits of ore near at hand? Ore is only one element
in the production of iron and steel. Many attempts were
made to turn the iron ore into finished products at the mines,
so as to compete with the Pittsburg iron, but that city was
near the market and the price of coke was so high, due to
the expense of transporting it to the North, that the northern
lake ports, long before the eighties, found that their great
future was to be in the shipping of iron ore and not in the
making of iron. For a long time, the mammoth vessels that
carried the ore to the lower lake ports had to return without
cargo. Later it was found that coal could be transported

^ Mineral Resources of the United States, 1903, pp. 41 and 45.

2 Ibid., 1908, Vol. I, Metallic Products, p. 64. The year 1907 is
selected because it was more nearly normal in its production
than 1908.

a Ibid., 1908, Vol. I, Metallic Products, pp. 71, 72, and 77.

14 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

northward in the otherwise empty holds, and iron and steel
could be made at a profit in these upper ports for the great
northwest markets as long as the coal transported merely
took up the otherwise vacant space in the vessels.

The Steel Trust, about three years ago, announced its in-
tention of building a large plant in the vicinity of Duluth,
in order to provide steel products for the northwestern
market.

After Pittsburg lost its supremacy in the production of
iron ore, blast furnaces and steel plants gradually moved
from the meeting-place of the Monongahela and Alleghany
Rivers to the cities along the lower lakes. Buffalo, Cleve-
land, and Chicago have become very important, while Pitts-
burg, although still increasing its output, is losing its pre-
eminent position. In June, 1908, the Iron Age records the
construction of the greatest steel plant in the world at Gary,
Indiana, a few miles east of Chicago. That plant is located
at the lower end of Lake Michigan, where the ore is taken
directly from the boat to the furnace without any intervening
railway service. In this way the new Indiana city is located
near the market and the raw material.

Labor and power are not so important in determining the
location of plants in the iron and steel industries as they are
in some others; because of two factors :

1. The inventive genius of the American has been able
to devise so much labor-saving machinery that the large
majority of the operations have become almost, if not quite,
automatic.

2. Coal and gas are raw materials for iron and steel.
They likewise make power. Hence the iron and steel indus-
tries when locating near raw materials are bound to locate
near power.

The extensive use of machines makes possible the pay-
ment of high wages without the reduction of profits. Labor
thua can be brought to any vicinity where accessibility to

GENERAL THEORY OF INDUSTRIAL LOCATION 15

raw material and market make a location desirable for steel
making.

The textile industries are, on the other hand, but slightly
affected by the source of raw materials as is shown from the
following tables, the first of which shows the production of
raw wool : ^

State.

Rank in
Value.

Value.

Rank in
Pounds.

Pounds.

Montana

2
3

4
5
6
7
8
9
10

$5,911,920
5,644,800
3,182,400
2,945,250
2,673,000
2,659,800
2,231,460
2,208,000
1,854,020
1,411,200

2
1

8
3
4
5
6

10
7
9

32,200,000

Wyoming

Ohio

Idaho

New Mexico

Oregon

Utah

36,000,000
13,000,000
17,500,000
16,500,000
16,500,000
14,700,000

Michigan

California

Colorado

9,600,000
13,300,000
10,500,000

Another bulletin shows the following with regard to
cotton : ^

State.

Rank in
Value.

Value.

Rank in
Bales.

Bales.

Texas

2
3
4
5
6
7
8
9
10

$192,609,640
101,867,948
84,725,223
69,065,372
81,964,522
52,136,939
34,948,317
33,875,637
24,221,407
17,481,097

2
3

4
5
6
7
8
9
10

3,793,518

Georgia

2,027,144

Mississippi

Alabama

South Carolina. . .
Arkansas

1,668,556
1,369,841
1,242,012
1,027,714

Oklahoma

North Carolina. . .

Louisiana

Tennessee

728,779
701,356
493,467
349,725

Total, 10 States

$672,896,102

13,402,112

Total, United States . .

$681,230,956

13,553,283

* Statistical Abstract of the United States, 1908, pp. 142, 143.

' Census Bulletin No. 100, Cotton Production in 1908, pp. 7, 8»

17 and 18.

16 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The ten largest woolen manufacturing states in the United
States are many hundred miles removed from the sources of
raw materials : ^

State.

Massachusetts. .
Pennsylvania. . . .

Rhode Island

New York

Connecticut

New Jersey

Maine

New Hampshire.

Vermont

Ohio

Rank.

1
2
3

4
5
6
7
8
9
10

f' Total, 10 States

r Total, United States.

Value of
Woolen Products.

$109,612,579
83,054,561
52,640,763
38,880,819
18,899,937
18,142,520
17,972,569
14,284,480
4,698,405
3,586,528

$361,773,161
380,934,003

Of the entire ten wool-growing states, Ohio is the only
one among the ten leading manufacturing states. The total
value of the combined manufacturing output of the other
nine of the wool-growing states makes a simi of $3,572,428,
of which amount California gave $823,239; Oregon, $1,142,-
356; Michigan, $1,338,493, and Utah, $268,340. Ohio, with
its comparatively small output in woolen manufactures, made
over $14,000 worth of woolen manufactures more than the
combined efforts of all the other great wool-growing states. ^

From a study of the above tables it is evident that the
position of the source of raw materials have small influence in
determining the location of woolen industries. The presence
of a good market is likewise not so important, as is evidenced
by the fact that the middle west is the home of millions of
people, and yet only one commonwealth finds a place in the
list of the first ten manufacturing communities.

1 Adapted from Table 45, Census Bulletin No. 74, pp. 130-137
« Census Bulletin No. 74, pp. 130-137.

GENERAL THEORY OF INDUSTRIAL LOCATION 17

In 1905 the ten leading cotton manufacturing states were :

state.

Rank.

Value of
Product.

Bales
Consiimed.2

Spindles. 3

Massachusetts. . .
South Carolina. .
North Carolina. .
Georgia

1
2
3
4

5
6

$129,171,449
49,437,644
47,254,054
35,174,248
30,628,843
29,540,770
24,136,813
18,239,155
16,760,332
15,405,823

906,100
555,467
497,947
402,652
161,583
260,928
49,442
88,921
198,820
130,949

8,411,249
2,864,092
1,880,950 -
1,316,573

Rhode Island . . .
New Hampshire.

Pennsylvania

Connecticut

Alabama

2,049,522 ,
1,301,281 '•

266,097
1,149,915 >

758,087

Maine

891,246

Total, 10 States
Total, United S

tates . .

$395,749,131
442,451,218

3,252,809
3,629,085

20,889,012
23,155,613

Comparing the tables showing the cotton-growing and
those listing the cotton-manufacturing states, there does seem
to be some connection between the raw material producing
sections and those which manufacture. Is it a mere co-
incidence? Why does Massachusetts produce more than
two and one-half times as much cotton goods as does its
nearest rival state, South Carolina? Evidently other factors
than raw material must be considered in locating textile
industries.

The woolen industries in the United States in 1905 pro-

1 Census Bulletin No. 74, p. 61.

2 Ibid. , Table 9, p. 42. Pennsylvania owes its position to the im-
portance of weaving. Much yam is brought into the state. New
York consumed a larger number of bales of cotton than did either
Connecticut or Pennsylvania. Maryland, including Delaware, con-
sumed a greater number than did Pennsylvania, viz.. New York,
99,297 bales, and Maryland, including Delaware, used 55,429 bales.
Table 9 of Bulletin No. 74 excludes Sea Island Cotton.

^Bulletin No. 74, Table 16, p. 51; New York and New Jersey
exceed Pennsylvania in. ni^rflb^r pf spindles. New York, 704,643 ;
New Jersey, 436,764.

18 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

duced goods to the value of $380, 934, 003, ^ and New England
made $218,108,733 worth, while New York, Pennsylvania,
and New Jersey made goods to the value of $140,077,900.2
Southern New England, New York, New Jersey, and Penn-
sylvania made $358,000,000 worth of goods out of a total
production of $381,000,000— nearly 94 per cent.

The silk industry shows a like development, as indicated
by the following table :

State.

Bank.

Value of Product,

excluding

Duplications.^

Consumption

of Raw Silk.

(Pounds.)*

Number of
Spindles.*

New Jersey

Pennsylvania

New York

Connecticut

Massachusetts

Rhode Island

Illinois

2
3
4
5
6
7
8

$41,066,556

31,061,188

19,114,170

13,981,394

6,471,206

2,494,186

575,932

332,649

3,436,279

3,553,090

3,970,044

1,006,793

1,320,509

739,004

262,112

78,100

46,255

596,876

527,409

1,203,617

251,367

196,624

107,787

22,644

11,880

California

All other States..

3,846
128,414

Total, United S1

Total, S. New

N.Y., N.J. &

.ates . .
Eng.,
Penn.

$118,533,560
114,188,700

11,572,783
10,851,552

2,453,588
2,309,448

The Textile Industries seek their location for other reasons
than raw material. The population maj) (Fig. 2) shows
that the great textile states are located in the densest popu-
lation zone of this country. A large population offers two
great advantages to most industries, viz. : a profitable market
and abundant labor. The fiber industries are peculiarly
susceptible to lalDor conditions in that, to run successfully,
they must be near a la^ge supply of cheap labor which pos-
sesses sufficient training to attend the various kinds of
machines. In large centers of population women and chil-
dren can be employed to advantage in all kinds of textile

1 Census Bulletin No. 74, Table 1, p. 97.

«Ibid., adapted from pp. 130-137.

3 Ibid. . p. 172, ■> Ibid. . p, 174., * Ibid. , p. 183.

20 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

plants. They are quick to learn and have an innate dex-
terity which enables them to handle the light fibers rapidly
and deftly.

Prior to the Civil War, the Southerners were an agricul-
tural people. The ruling classes discouraged the introduction
of industrial arts, save as they were necessary to meet local
demands. Before 1880, there had been attempts to spin and
weave cotton, but in the year 1881 the Governor of Georgia
appeared at the Atlanta Cotton Exposition dressed in a suit
of cotton goods, the material of which had the same morning
been growing on the plant stalks. ^ This rather spectacular
demonstration called attention to the fact that the South
could manufacture as well as grow cotton. When the people
awakened to the fact that they could manufacture the goods,
they discovered that the country possessed a hitherto un-
recognized class of people who would make excellent laborers.
Mr. August Kohn in his work, "The Cotton Mills of South
Carolina," gives a very virid description of the methods
taken to secure laborers for the mills of his state. The
mountain sections of South Carolina, North Carolina,
Georgia, and Tennessee, have been for many years a fruitful
source of labor. ^ So great were the advantages offered to
these mountaineers over their old conditions that they came
down into the cotton mills by the scores and hundreds. On
the other hand the labor was so profitable that many South-
erners who started up mills made such large profits that
Northern capital began to invade the Southern field. The
mills, as a consequence, were so greatly increased in number
and size that labor has begun to become scarce and wages
are rapidly rising. The following tables are quoted from
Mr. Kohn's report:

^Cf. Twelfth Census of the United States, Vol. IX, Manufac-
tures, Part III, p. 28.

2 "The Cotton Mills of South Carolina," by Au^st Kohn.
Issued by South Carolina Department of Agriculture, Commerce
and Immigration, E. J. Watson, Commissioner, pp. 23-25.

GENERAL THEORY OF INDUSTRIAL LOCATION 21

TYPICAL MILL, 1902. '

Pay Roll,
two weeks.

Men.

Women.

Children.

Total Era-
ployed.

Average
per day.

Carding

$572.09

705.35

204.68

1,800.93

1,190.06

50.40

158.81

323.97

213.59

84
1
4
15
25
23

13
21
4
78
11

7
46
27

"i'

'"5"

66
97
34

162
13
4
20
25
23

$0.72
0 60 tV

Spinning

Spool, and Warp..
Weaving

0.50
0.92§
0.76J
1,05

Drawing

Slasher

Cloth Room

Machine Shops. . .
Outdoor Labor. . .

0.66i

1.08

0.77

Total

$4,148.68

231

127

444

$0.78f

THE SAME MILL IN 1907.

Pay Roll,
two weeks.

Men.

Women.

Children.

Total Em-
ployed.

Average
per day.

Pick, and Carding

Spinning

Dressing, Spooling
Weaving

$1,269.45
1,442.80
533.25
2,118.55
342.55
321.70
326.25

100
45

22
144
21
21
36

11
35
40

42
15

'io'

125
157
62
186
46
21
36

$1.15
1.06
1.02
1.30

Cloth Room

Machine Shop

Other Labor

0.83
L39
0.91

Total

$6,354.55

389

143

101

633

$1.13 ,

Market and labor are the two dominating factors which
determine the location of textiles. If, in addition, there are
other inducements offered, such as proximity to raw materials
or cheap power, the industry which can take advantage of
these added factors will be the one to move to the favored
section. Cotton is the textile which has the added advan-
tage, and hence its move southward while the others remain
in their old locations wherein they have the advantages of
good market and abundant labor supply.

An important factor in the early manufacturing develop-

* "Cotton Mills of South Carolina," p. 33,

22 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

merit of New England was the presence of a very considerable
amount of water power. In 1905, Massachusetts alone con-
sumed nearly 77,000 water horse power in turning the wheels
of her textile mills. -^

' ' The preeminence of Minneapolis in the manufacture of
flour and grist-mill products is due princij^ally to the early
utilization of the water power furnished by the Falls of St.
Anthony. " ^ In New York the Chemical, Wood Pulp, and
Power plants of Niagara Falls owe their existence solely to
the presence of nature's great marvel located at that point.

The wood-pulp industry is a conspicuous example of one
wherein power plays an important part in locating the estab-
lishment. The following table has been compiled from the
Census Report of 1905 : ^

State.

Paper and
Wood Pulp

Produc-
tion. Tons.

1905.4

Rank

in
Pro-
duc-
tion.

Total

Water

H. P.

Consumed

in State. 5

Total
Water
H. P. Con-
sumed in
Paper and
Wood
Pulp. 6

Total other

Power

Consumed

in Paper

and Wood

Pulp.7

Percentage
of Water

Power used

in Paper

and Wood

Pulp.

New York . . .

Maine

Wisconsin

New Hamp. .

Penna

Vermont

Virginia

Michigan . . . .

Oregon

Ohio

606,014

456.921
241,537
173,888
83,114
60,747
42,307
38,612
31,549
29,274
28,695
28,445

2
3

446,134

203,094

112,665

100,274

50,620

76,237

25,946

39,342

20,660

18,149

6,404

183,427

325,472

116,508

83,138

35,684

6,631
36,697

3,760
12,655
10,982

4,190

1,310
51,843

70,430

47,563
24,870
14,644
49,459

6,976

4,460
18,765

1,753
32,999

3,266
55,177

82.2

7L0
76.9
70.9
11.8
84.0
45.7
40.2
86.2

n.2

West Va

Mass

28.6
48.4

Tot. 12 States
Total, U. S..

1,821,103
1,921,768

1,282,952
1,647,969

688,870
717,989

330,362
404,575

67.5
63.9

1 Census Bulletin No. 53, p. 48.

«Ibid., No. 46, p. 16. ^ibid.. No. 80, p. 26.

* Adapted from Census Bulletin No. 80, p. 26.

* Census Bulletin No. 88, p. 18.

•Adapted from Census Bulletin No. 80, Table 19, pp. 32-43.
' Ibid. J includes steam, gas, gasoline, and electric power.

GENERAL THEORY OP INDUSTRIAL LOCATION 23

Water power is usually the cheapest source of energy that
a plant of any kind may possess, and the above table reveals
its importance as a primary factor in locating the paper
plants. It is a significant fact that the great paper states in
the above table which do not use water power are in the
vicinity of abundant supplies of fuel. In Oregon, where
waterfalls yield more than 86 per cent of the power of the
paper mills, the output has, since 1900, increased from 1, 154
tons to its present total of 31,549 tons.*

Seldom, indeed, does it happen that the existence of any
one of the primary factors determines an industrial location.
If, however, there is a combination of two or more of those
influences, we have ground prepared for the development of
industries, and the ones which will permanently flourish in
the favored districts will be those which can count the great-
est number of desirable primary factors.

^ Adapted from Census Bulletin No. 80, Table 19, p. 26.

CHAPTER in

THEORY OF PLANT LOCATION

In every manufacturing center, plants are erected and run
by many different corporations. A number of years may pass
by, and at the end of that time some of the plants will be
doubled in size, a few will retain their old dimensions, while
still others will have passed out of existence. Pittsburg, for
instance, is a great location for the iron and steel industries,
yet there have been many individual failures in that district
— failures not altogether due to incompetence.

The city of Philadelphia is an ideal textile center, yet in
that place there are dozens of plants which have gone to the
wall, and not through actual bad management. A number of
carpet mills located in certain sections of the district of
Kensington have been actually forced out of their location
because of the increasing value of the sites on which they
stand. --^^'^-

In another section of Philadelphia is a conspicuous exam-
ple of the working out of this tendency. In 1885, M. W.
Baldwin built his locomotive shop at the comer of Broad and
Hamilton Streets, a situation then on the outskirts of Phila-
delphia. As years went by. Broad Street, in that vicinity,
saw the location of a number of other plants, and it likewise
saw the building up of a large number of residences and
other structures. At the present time this district is in the
center of the city, and property values are enormous. The
works cannot expand within this district save at a tremen-
dous cost. By the year 1900 the plant had completely out-
grown itg boimds within the central part of the city, and had

THEORY OF PLANT LOCATION 25

established part of the works along the Philadelphia and
Reading Railroad in the vicinity of Twenty-eighth and
Brown Streets. There again, however, expansion became too
costly, so finally the company has purchased a tract of land,
184 acres in extent, at Eddystone, Penn., a small town
about twenty miles from the center of Philadelphia. In this
new location the firm has erected extensive foundries, smith
shops, and other buildings, and in case it desires to move
their entire plant to this location, it has abundant ground
for present needs and sufficient space for indefinite expan-
sion.

Even if the question of expansion cost were not consid-
ered, the tax rate, rental charges, and other considerations
are matters of such considerable importance in a congested
community that the profits of any concern may be seriously
affected in a central location.

The position of a plant within the range of industrial
centers has a profound influence in determining the success
or failure of the establishment.

From the physical side the success of a plant is dependent
on two main features : (1) its location; (2) its layout and
equipment.

The location of a jplant should be fixed in such a manner
that the people interested in its success can sell the goods
most profitably, buy supplies to best advantage, and manu-
facture with the least expense. To do all this, the most
favorable location will be one that will include the greatest
possible number of the following advantages ;

I. Selling.

Nearness to a large consuming market, or at least a situ-
ation such that it can have a cheap and adequate outlet for
the output.

^v 11. Buying.

Closeness to supplies, or a situation such that supplies can

26 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

be secured at a minimum expenditure for transportation and

at the same time be obtained whenever desired.

III. Manufacturing.

1. Proximity to a large adaptive labor population.

2. Ready accessibility to repair shops.

3. Nearness to good banking and credit facilities.

4. Ability to build so as to suit special needs of industry.

5. Ability to expand plant cheaply.

6. Low rent and tax rates.

7. Freedom from restrictive ordinances or onerous legal
or other requirements.

8. Adequate fire-fighting facilities and low insurance
rates.

** I. Selling, and II. Buying. Nearness or Accessibility
to MarTcet and Supplies. — To be successful a concern must
have its plant accessible to market and raw materials. The
location depends largely upon the nature of the goods manu-
factured, and to some extent upon the size of the establish-
ment. A small firm should place its plant in such a position
that it can be easily accessible to both market and supplies
without the necessity of depending upon any single railroad
service. Such a plant cannot command sufficient traffic to
make it worth while for a road to give it special service,
hence if it is in an isolated community, it must accept a
poor or indifferent service with consequent loss of business.
If, however, the small plant locates in a community where
there are many like itself, it will be in a position to secure
better service because the roads will be able to handle the
traffic of many concerns from a central point, and they will
arrange their train schedules to accommodate the combined
needs of a large number of manufacturers.

The map (Fig. 3) shows a small portion of the city
of Philadelphia, with the location of the dye houses which
dye carpet yams. In addition are placed the carpet-weaving

THEORY OF PLANT LOCATION

plants which are dependent upon the dye houses for their
raw materials. The largest of the works in the entire district
would be unable to give sufficient traffic to either road to

O ^>.

A»

• y/^ N

O J

• /

1 i

° o oo

-^^. /

^^^ ^

f ^ *

•

o °'>^

•

^ ^ '^

.WO

^KNiS

F ° * y

^o^.

oc«

f o • X

°ot

o ^./^

^)i^'^<.

1 •

fW <?•

/
/

• o

o 0

•

<> <^ /

' /

Q t/oo DYC fovaea 1 ^

»/

_j^

Fig. 3.— Map of a Portion of the City of Philadelphia.

make rate or service competition worth while, yet all the
plants combined do make considerable traffic for both roads,
and as a result the transportation service is good.

Were the dye houses iu a differep.t location, they would

28 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

not have a market so accessible, while if the carpet mills
were differently situated, they would not only have to pay
freight charges for the yarn to the dye houses, but likewise
from the dye plants to their mills. With both located in
such proximity there is one freight charge for the raw ma-
terial to the dye houses, a drayage expense from the dye
works to the carpet mill, and then a final charge for the fin-
ished product to the consuming market.

If a plant grows so that its supplies and products demand
large facilities for handling, and its consuming public is
national or world-wide, then the question of market is one of
accessibility and not one of proximity.

To be accessible, a plant should be so located that it has
cheap inlets and outlets for its goods. The cheapest possible
kind of an outlet a plant may have is one that will enable it
to have a choice of a number of means of transportation. If
a plant can be so situated that it can have competition be-
tween waterways and railroads, or between railroads, it is
advantageously placed. At the present time roads do not
give rebates, nor do they compete for freight by cutting prices
below the published schedules, as they once did; but never-
theless, if a plant is placed so that it can secure competition
from several lines, it will have concessions granted to it in
the way of special commodity rates, of car supplies when
needed, and will have its freight more promptly handled
than if it is dependent entirely upon one road. This is true
for two reasons. One is that it can have a choice of alter-
native routes for shipment, so that in case one is filled with
orders, the firm will be very apt to secure accommodations
on the other. Another reason is that if a road realizes that
a freight consignment can be shipped over a rival's lines, it
will be more likely to make efforts to take care of the freight
in order to prevent the other transportation company from
securing it. Figure 4 illustrates well the advantage that
accrues to a firm if it ia placed iu a location whereby it haa

THEORY OP PLANT LOCATION

a choice of water and land shipment and competing lines of
road. The Union Railroad shown on the map enables the
Carnegie plants to ship their goods over any one of the
four roads touching Pittsburg, namely, the Pennsylvania
lines, the Baltimore and Ohio, Pittsburg and Lake Erie,
and Bessemer and Lake Erie. In addition to that the

umo» »». i:*mrr£»si> - BALTiMOnc A Ohio n./K.

•» BtSStntH * lUMtS KJttm LO'tltUMA- mr_ unitn tt.n IB

Fig. 4.

Monongahela River makes it possible to receive goods with-
out using the railroad, and puts the plant at an advantage
as compared with other plants which depend entirely upon
one line for their receipts and shipments.

The United States Steel Corporation has always appre-
ciated the benefits that can be reaped from adequate trans-
portation facilities. Their new plant at Gary, Indiana, has
a frontage of ten miles on Lake Michigan, and is located on
or immediately adjacent to five trunk lines of railways, a
significant indication of the far-sighted sagacity of the mov-
ing spirits in that great organization.

III. Manufacturing. — L Proximity to Large Adaptive
Labor Population. — Every establishment of whatever kind, to

80 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

have the elements of success, must have a supply of trained
laborers at the call of the management for the purpose of
running the machinery and handling the raw materials
through their various stages.

It is not only necessary for a factory to be located in the
midst of a large population, but it is likewise essential that
the population be one that can be depended upon to work
efficiently and regularly. The two qualities, efficiency and
regularity, are not always to be found in mere size of popula-
tion. The most serious objections to the negro in the South
is his unreliability as a worker in a plant. The writer knows
of a number of iron plants located in the midst of a very
considerable negro population, where the labor problem was
one of grave concern. In two ways the negro cannot be
depended upon. He will invariably take several days for a
recess after each pay day, thus crippling the plant by his
absence, and he cannot be made to attend to business while
on duty. If he works on the night turn he is likely to go to
sleep at some critical time when alertness is necessary to
presence life and property. It is only by the most vigilant
oversight that the negro can be kept from getting into trouble
when he consents to be present at a plant. In some sections
it has been found advisable to import foreign laborers to the
Southern mines and mills rather than to attempt to work
with the local supply of labor.

The negroes are not alone in their unreliability as work-
ers. In the mill districts of the Carolinas, one of the great-
est difficulties with which the mill owner must contend, is
absenteeism of the employees.

" There are probably enough workers in the various mill com-
munities to man all of the machinery, but the great difficulty to-
day with the cotton mill labor is that it is not constant and will
not work every day in the week, no matter what the inducements
may be. Every cotton mill in this state recognizes the fact that
to have a full complement of labor in the mill each morning, when

THEORY OF PLANT LOCATION 31

the whistle blows for the work to begin, it is practically necessary
to carry a surplusage of from 20 to 25 per cent of 'spare help.'

"In a cotton mill in upper Carolina that has forty-seven weavers,
who ought to make 564 days in a pay period, the president, to
induce the maximum attendance of the weavers at their work,
offered a premium for all who would report every day in the two
weeks. In June there were 70o\ days lost out of the 564 that
should have been worked. In August, with the same premium
system in force, 161i days were lost by the same help. This calcu-
lation does not account for the spare help that had to be used to
fill in for the loss of time of the regular help." ^

The great source of expense in a factory is its labor bill.
If the plant is well supplied with orders, the wages paid to
the workers are a profitable investment. If, however, there
is a scarcity of orders, the first thing a plant should be able
to do is to cut down its most burdensome items of expense.
The only time the laborer can be a profitable investment is
when he is producing goods, so that it is absolutely essential
for the prosperity of the plant, especially if it is an industry
where there are fluctuations in orders and output, that the
plant be so established that when bad times come, it can cut
down its labor force to suit the limited requirements of such
intervals, and yet be so placed that when good times return
it can reemploy trained laborers.

Mere numbers of people do not necessarily make a suit-
able labor environment, and what may be a good labor situa-
tion for one industry may be unfitted for another. Certain
classes of production can employ only men, while there are
others wherein women and children may be profitably en-
gaged.

The Anthracite Coal region offers employment to thou-
sands of men, but women cannot find work around mines.
As a result, we find in mining sections a considerable popu-
lation of available female labor. The textile industries were

1 "Cotton Mills of South Carolina," by August Kohn, pp. 61-6^
4

82 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

not long in recognizing the opportunity, and, as a result, we
find located in the Schuylkill, Lehigh, and Susquehanna
Valleys in Pennsylvania a number of silk mills, stocking
factories, and other fabric industries which make use of this
otherwise unemployed population.

The real question which the manufacturer should consider
is not "are there many people in a given community?" but
"will that community have available a sufficient amount of
labor to suit my peculiar needs?"

2. Ready Accessibility to Repair Shops. — If orders are
plentiful, and a break occurs at any point in the system, a
firm loses in shortened output and prestige, if not by actually
forfeiting posted guarantees. So important is the question
of adequate repair facilities in the iron and steel business
that the large plants have entire sets of engines held in re-
serve to be ready for any unexpected breakdowns. A small
plant cannot afford to have reserve engines or duplicate ap-
paratus to be ready for eventualities; and, if it is so located
that the repair shop or the supplies for the needed parts are
inconveniently distant, it is liable to sustain severe losses
through a mishap. Hence for a small plant, proximity to
repair facilities is a highly desirable asset. If a plant is
large, it need not consider the question of placing itself in
the vicinity of repair houses, because it can better afford to
have its own repair shops.

Large steel plants, textile establishments, and other con-
cerns invariably have their o^ti repair equipment, and are
constantly improving the mechanical end of their plants. In
fact, if they are well organized and efficiently handled, the
repair shops may do much more than merely act as repairing
agents for the concern, and some plants have utilized their
machine shops for the introduction of improvements through
the entire establishment. The improvements, small as they
are in individual items, amount in the aggregate to large
savings for the firm, and the added expense that the repair

THEORY OF PLANT LOCATION 33

department requires for its upkeep is really a money-making
investment for the firm, because it keeps the machines con-
tinuously running at a high state of efficiency, giving a
maximum output for a minimum expenditure of power and
labor.

3. Nearness to Good Banking and Credit Facilities. —
One of the most important assets a company may possess ia
good credit, without which it can hardly ever hope to advance
during good times or even perpetuate its existence during
stringent periods. A small concern is usually dependent
upon nearby banks for its credit, and if it is inconveniently
located, or is distant from good financial backing, it is put-
ting itself into the business world with a severe handicap.
If it is well known and near a number of good credit sources,
it stands a much better chance of securing backing on a rea-
sonable basis than if it is dependent upon one institution
that has little or no competition.

A large concern is differently situated in the respect that
its mere size gives it prestige in a wider financial circle, and
enables it to get credit facilities in many ways and from
many sources not open to small concerns. It can, therefore,
practically ignore in its location local credit possibilities.
In fact, a concern may get to be so large and important that
it can dominate banks and financial institutions and largely
create for itself a credit fortress ; but those organizations are
few. Generally speaking, the smaller the plant, and the
more local its market, the more unavoidable is its dependence
upon local banks, and the more discriminating the care
which must be exercised in its choice of a site.

4, 5. Ability to Build So As to Suit Special Needs of
the Industry, and Ability to Expand Plant Cheaply. — An
organization, to realize its full measure of success, should
build the plant in such a manner that the manufacturing
process may be carried on with a minimum expenditure of
time and material. The ideal plant is one that is adapted to

84 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

its special type of manufacturing. The ideal location is one
that will permit such a plant to be built, and at the same
time give it sufficient clearance space on all sides to permit
additions to be made without necessitating a rearrangement
of the machinery and equipment of the original plant in case
growing business demands an increase in facilities.

\\Tien a profitable business is increasing, a manufacturer
can be in no worse position than to be unable to fill orders.
If he does not fill them, rivals will soon appear in the field
who will not only take his surplus business, but will become
keen competitors for trade hitherto his own. Hence, if a
plant is to be extended, it should be possible to make the
enlargement in such a manner that at no time will there be
any diminution in the output of the old plant until the new
one can be utilized.

It has been found that a single plant may be enlarged to
a point where further extension does not tend toward econ-
omy, and where it is cheaper to build a new factory or plant
than it is to keep on increasing the size of the old one.
When a plant reaches those dimensions, expansion room
does not need to be provided, but until those proportions
are attained, an organization should endeavor to make pro-
visions for future growth. To provide for that future possi-
bility, it is necessary, for the prosperity of the concern, that
it shall not burden itself at the beginning to provide for
future prospects. It should not tie up much capital in a big
plot of ground or large building in anticipation of future
needs, because by so doing it is putting an unnecessary
burden in fixed charges upon a present business, that should
have no heavy expense at all. With such a load, the man-
agement cannot experiment to improve the output, to cut
costs in manufacturing, nor can it adopt a liberal policy to
extend its market for the goods.

One of the surest plans a concern can follow, to prevent it
from ever requiring expansion room, is to incur a heavy

THEORY OF PLANT LOCATION 85

expend in securing a location that will permit future
growth. In selecting a site, present demands should be
amply satisfied. They should never be subordinated to
future hopes.

6, 7. Loiu Rent and Taxes, and Freedom from Restric-
tive Ordinances or Onerous Legal or Other Requirements. —
A selling organization must put itself in some conspicuous,
easily accessible center; hence it would be false economy to
accept a cheap location if it were away from a much fre-
quented situation. Frequented situations are almost invari-
ably expensive. Taxes and rents are bound to be high, but
the increased business that can be done in such a position
will more than compensate for the heavy burden involved in
the location.

A manufacturing establishment has quite different condi-
tions. Quality and quantity of output are the main factors
which contribute to the success of a plant.

The managers cannot afford to stay out of the market, but
it is not necessary to put the plant in an expensive location
to have the goods accessible to the consumer. The promoters
should endeavor to locate in the best possible place that will
allow of cheap manufacturing, and will give easy accessi-
bility to the trade.

The selling department, as a matter of fact, need not be
in the plant at all, and in a great number of the largest con-
cerns it is located in the commercial centers, far removed
from the buildings which turn out the goods. In adopting
this scheme, one can combine the advantages of a good sell-
ing location with economy in fixed charges for the producing
part of the plant.

Not only should care be exercised in locating away from
high taxes and rents, but investigation should be made of
the question of restrictive ordinances that may affect the
plant. Manufacturing establishments are frequently annoyed
and even seriously hampered by local ordinances which pre-

86 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

vent them from carrying on their work in the manner most
satisfactory to themselves.

The people have a perfect right to pass laws and regula-
tions which will make life pleasant in any given community.
The property and welfare of a large number of people should
not be sacrificed for any one group of citizens; yet, on the
other hand, the manufacturer cannot afford to sustain restric-
tion in output or unnecessary expense for some objection,
either fancied or real, of the surrounding neighborhood. In
selecting a site for a new plant, therefore, care should be
exercised that the new factory shall not be the cause of hos-
tile legislation.

Some years ago a certain company entered into a contract
with the municipal authorities of a large city to dispose of
the garbage by an incinerating process. The contract was
one satisfactory both to the municipality and to the officials
of the concern. Fortified by these considerations, the cor-
poration purchased an abandoned white lead works and
erected expensive apparatus for the purpose of reducing their
garbage. No objection was made to the new installation,
but it had not been in operation one week before there was
a veritable hurricane of vituperation heaped upon everyone
connected with the plant and upon those who made the con-
tract. Injunctions were issued, within a month the company
became involved in scores of law-suits, and finally had to
vacate the premises.

8. Adequate Fire- Fighting Facilities and Loio Insurance
Rates. — A manufacturer in selecting his site should take
into consideration the fact that a fire can injure his building
in one of two ways. It may either originate within the walls
of his own structure or invade it from the outside. The
internal and private fire-fighting facilities will be treated
later. Here we shall note the fire risk with respect to loca-
tion.

Many towns in this country have poor fire-fighting facili-

THEORY OF PLANT LOCATION 87

ties. As a consequence manufacturers in those districts pay-
insurance premiums disproportionate to the assessments, the
structure of their buildings, and the nature of their business
would otherwise demand. Insurance companies are very
critical of the fire-fighting facilities of a community. In
almost every towm there is a fire-danger zone assessed at a
higher rate than is the surrounding districts.

In taking into consideration the public fire-fighting facil-
ities, the manufacturer does well to examine carefully the
following features :

1. Water supply: By whom it is owned, its organization.
Has the place high pressure mains? Is there ever danger of
water famines, and all other points which may in any way
affect its efficiency in fighting a large or small conflagration.

2. Fire department: Its organization, including the per-
sonnel, from the chiefs do^m to the least important man of
the department. Is it a paid or volunteer company? The
extent and nature of the equipment of the fire stations, the
number and location of the stations. Have all the fire plugs
standard couplings, and all other points which may affect
the utility of the protection at a critical time.

3. Fire-alarm system: Here the investigation turns on
the number of alarms in the community, their location,
efiiciency, design, and other similar considerations.

4. Fire department auxiliaries: Under this head are con-
sidered the efiiciency of the police department, arrangement
of the streets, the proximity to other communities which can
give assistance, the possible value of such aid in time of
need; is the district menaced with overhead wires? Are
the building laws efficient and well executed?

Some cities have gone to the trouble and expense of in-
stalling within their fire-danger zones special water mains
with equipment to keep the water pressure at a high point
throughout the system. These mains are for fire use only.

hx the year 1900, the insurance companies raised the fixQ

38 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

rates in Philadelphia 25 cents per $100 on all risks located
in the congested district. In 1904, a high pressure system,
equivalent to twenty steam fire engines, was finished and
turned over to the city. The stationary pumps at the water *
front can deliver to the hydrants a water pressure of 300
pounds to the square inch. The plant is run by gas, and
the entire system can be put into full operation in seven
minutes. Only forty- five seconds are necessary for the pumps
to develop 800 pounds pressure. The plant is capable of
supplying fifteen IJ-inch streams of water, which may be
concentrated on any block within the protected district.
When the plant was tested and accepted, the Fire Under-
writers' Association reduced the fire rates to the old basis. ^
This is one of a number of examples which may be cited
showing the importance of being in a good fire-fighting
community.

If a person is manufacturing a class of goods not espe-
cially inflammable, it is inadvisable for him to erect his
works near another plant whose commodities are noted for
their inflammability. Proximity to such a building forces
the former manufacturer to take especial precautions in erect-
ing his plant. It necessitates the use of fire walls and other
expensive devices, besides compelling him always to carry a
higher insurance rate, while notwithstanding all these pre-
cautions his position is still precarious.

'^Insurance Engineering, Vol. XII, "High Pressure Fire SyS'
terns," by F. L. Hand, pp. 525-541.

CHAPTER IV

THE IDEAL SITUATION

The type of manufacturing that is carried on by an or-
ganization determines to a very considerable degree the most
favorable site for its plant. There may be three kinds of
situations for plants, viz. : (1) country, (2) city, (3) sub-
urbs, and each one of the three offers peculiar advantages.

1. Country. — The economic advantages offered by a
coimtry location are few in number, but for some industries
they are exceedingly imjoortant. The country offers, as in-
ducements to the manufacturer, cheap land, low rents and
taxes, and freedom from restrictive ordinances. These fav-
orable considerations enable interested people to purchase
sufficient territory to permit of the adaptation of a plant to
the special requirements of the process, and at the same time
allow them to provide for space enough to grow without
making it necessary for them to tie up too much capital in
unproductive ground.

The country, however, offers a number of objections as a
location for industries. In the first place, it is hard to draw
to sparsely settled sections a sufficient body of skilled labor-
ers to make it possible to keep the plant continuously em-
ployed. A firm of stove founders once conceived the idea of
erecting a plant in a small town at a considerable distance
from any large city. They were exempted from taxes for a
term of years and had many other favors granted to them,
yet in spite of all the assistance they eventually had to
abandon the plant on account of its inability to hold skilled
labor in the district. If the industry is one where akiUed

40 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

labor is not an important factor, it is sometimes possible to
recruit workers from the surrounding districts. The cotton
manufacturers in the South soon exhausted the labor in the
small towns wherein they were located, and recruited their
ranks from the back country by means of advertising through-
out the district for workers. August Kohn in his book gives
a number of illustrations of the advertising matter that was
used, and speaks at length of the troubles the Southern man-
ufacturer had in getting labor. ^

The country offers very little inducement to working peo-
ple to settle within the vicinity of a plant so situated, unless
the plant is of considerable size.

Another objection that may be offered to a country loca-
tion is that it is not near supply houses or market, and re-
pair shops are apt to be unhandy. No one can afford to let
a plant stand idle at any time, least of all when supplied with
orders ; so, if an accident happens to a running machine, the
renewal parts should be available to make immediate repairs.
If a plant is in the country, it is likely to be away from
supply houses, and must, therefore, carry in stock a great
many more duplicate parts of equipment than if it were in a
large city. To carry duplicate parts, one must tie up money
in unproductive material. The pieces may be used sooner
or later, or it may happen that new machines will come in
which cannot use those parts, and the material has nothing
more than a scrap value.

A large plant can ignore the necessity of keeping in con-
tact with supply houses and repair shops and similar advan-
tages, because its mere size will make it possible for it to
keep a repair department and likewise make it profitable for
it to carry sufficient supplies to be independent of any out-
flide concern. The plants of large companies, like the United
States Steel Corporation, always have their own foundries

1 "ThQ Qotton Mills of South Carolina," Artiqlq IV,

THE IDEAL SITUATION 41

and repair shops as a part of the plant. The Gary plant at
Gary, Indiana, has, in connection with its steel plant,
foundries, boiler shops, machine shops, carpenter shops,
and pattern shops, so that it is practically independent of
all outside aid.

So far as the market is concerned, to the manufacturer of
steel rails, structural iron, or any large and heavy material
whose products go over the entire country, nearness to a city
is of minor consideration, because their markets are widely
scattered. With such production, transportation facilities
and switching privileges are the essential needs rather than
close proximity to a city.

2. City. — In a city, the cost of living is greater than in
the country, but the city offers to working people a larger
number of economic and social advantages than does the
country. Wages, as a rule, are higher, and there are more
opportunities for advancement open to the ambitious person,
because city evening schools and other educational advantages
present means of self- improvement that are not as a rule
offered to country dwellers.

Commercial houses in large cities afford attractive em-
ployment to women and girls in the way of stenographic
positions, clerical work, and bookkeeping, while the large
department stores employ hundreds of girls as sales people.
When a working family is located in a large city, every one
in the family has a greater opportunity of securing employ-
ment. The family is not so dependent upon the earnings
of the older male members as it is when located in the
country.

Many industries peculiarly adapted to the employment of
women and girls find that a city location is by far the more
desirable. Textiles, as a rule, flourish better in a large com-
munity, the reasons for this being that women and children
are more readily procured for employment. The northeastern
part of Philadelphia is a great textile center, very largely

42 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

because of the location there of large numbers of shipyards,
machine shops, foundries, steel works, saw works, leather
curing, and other plants which employ men almost exclu-
sively.

Besides the fact that working people can get work more
readily in the city, there is another consideration. The city
offers more entertainment than does the country. The amuse-
ment and social side of life is usually more pleasant in
the city than in the country. There is more gaiety in the
town.

Aside from the question of labor, the city location is
better for being near to a market. This is an exceedingly
important consideration for industries directly dependent to
a greater or less extent upon other plants, e.g., box factories,
yam mills, etc. Industries which are varied by styles or
tastes of people do better if located in town. Small manu-
facturers can do better in a city because their selling expenses
are lower. They can learn of selling markets more readily,
and can make quicker deliveries because of better express
service.

A third manifest advantage of a city location, especially
for a small plant, is, as we have already seen, that it will be
near to repair shops and supply houses.

In addition to being near supply houses and repair shops,
a city environment usually contributes the advantage of local
banking and credit-obtaining facilities. These latter items
are of great importance to small concerns. A large plant, to
carry on any of its important schemes, must be able to secure
financial backing from the great money centers ; hence, so far
as credit is affected, location is not a matter of material con-
cern. Moreover, a large organization can, either directly or
indirectly, establish local banks and thus create for itself a
credit source of considerable importance. To the smaller
plant neither access to the large money centers nor ability to
establish and dominate banks is possible. It must depen,d

THE IDEAL SITUATION 43

upon friendly outsiders who are in a position to know its
managers and the success of the enterprise. If a small or-
ganization is near only one bank, it may have to consent to
hard borrowing terms. If it is near many, it will have a
much better chance to get reasonable concessions which will
helj) it along the road of continued prosperity.

The main disadvantages of the city are high land cost,
entailing large rents and taxes and a liability of being com-
pelled to obey municipal ordinances which may restrict the
output of the concern or increase its running expenses.

To summarize the entire situation, if there were no other
place than a city or the country to establish a plants a gen-
eral statement might be made that for a small plant a city
location is better, while for a large concern a country site
would be more advantageous.

3. Suburbs. — The suburbs of large cities, however, offer
a third situation. The suburbs possess the advantage of
being able to combine to a great extent the advantages of
both the city and the country. In the suburbs, land values
are usually not so high that they unduly burden the concern
to provide for future growth; and restrictive ordinances are
likewise usually less frequent than in the cities. Labor is
easily persuaded to come to the outskirts of large cities, be-
cause, as a rule, rents are lower and living is cheaper, while
at the same time the trolley-car, telephone, and other con-
veniences have made it possible for the suburbanite to par-
take of the advantages of the city.

Suburban locations are likewise liable to be in the region
of good railway facilities. Large cities are apt to be the
meeting-places of a number of railways, and many commu-
nities have built belt lines connecting these various roads,
making it possible for the suburban manufacturer to have
the choice of several lines by which he can ship his goods.
Where belt lines are not in existence, it is much easier for
the suburban manufacturer to obtain private sidings to coni'

44 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

peting railways than it is in either city or remote country
locations.

The suburbs can provide for the other considerations —
accessibility to repair sho2:)8, supply houses, nearness to mar-
kets, banks, and credit facilities — nearly, if not quite, as well
as the city itself.

In addition to the advantages naturally coincident with
a location either in country, city, or suburbs, there are fre-
quently other inducements offered by various bodies to en-
courage the industrial development of the community. Rail-
roads are very anxious to have factories locate along their
lines. The two bodies, the local community, and the rail-
road company, work in harmony, although each is working
for its particular end, the former to secure plants, the latter
to obtain traffic. The railroads have organized industrial
depart.menta which they call by various names. The officials
in charge of these departments keep on file all available in-
formation relating to the natural and artificial advantages of
the towns and districts tapped by their lines.

The artificial advantages of a town or district are those
favors and concessions granted by the residents of the place
to any newcomers who may be induced to bring a factory or
some other kind of institution within its borders.

Few communities fail to see the advantages of the pres-
ence of manufacturing plants. Much of the recent increase
in Southern prosperity has been due to the location of profit-
able cotton mills.

' 'The addition of such an industry as cotton manufacturing could
not but increase the value of real estate in Spartanburg County-
very greatly for several reasons.

"1. The cotton mills have been located in all parts of the county.
There have arisen small towns wherever the mills have been
erected, and the property, which was formerly on the market as
farming lands, is now sold on the basis of city lots, which has ele-
vated values very much. The mills located in the vicinity of the
larger towns have developed the outskirts of these towns ; so that

THE roEAL SITUATION 45

the property has become very valuable, while before the coming
of the mills the property was not rated as city property.

"2. The enormous increase in the annual income of the county of
Spartanburg, caused by the coming of the mills, has caused a
general prosperity, and desirable property was soon purchased by
those participating in the benefits. With the general prosperity
came the desire to own homes and real estate. With ready pur-
chasers always in sight there was a constant demand for real
estate, and with the demand came the increase in value.

"3. The dividends annually paid out in Spartanburg go to swell
the bank accounts of the people in the county, and this money is
soon reinvested. Real estate is considered an excellent investment
in Spartanburg, and many of the dollars paid out by the mills go to
purchase real estate. There is always a demand for good real
estate, and there is a large amount of property changing hands in
this county each year." ^

What is true of South Carolina and the cotton mills is
likewise true of other parts of the country, and, as a result,
communities scattered all over this land offer various induce-
ments to factory managers. These inducements may be
classified under the following heads, viz. : (1) free land,
(2) free building, (3) exemption from taxes, (4) subscrip-
tions to stock, (5) cash bonus, (6) miscellaneous favors.

(1) Free Land. — The Boards of Trade of many towns
have committees appointed whose work is to advertise the
advantages of their particular localities. These committees
keep informed of new projects proposed by various outside
concerns, and they endeavor to secure the interest of the pro-
moters by presenting to them the advantages of their town,
and at the same time these Board of Trade workers endeavor
to secure the active co-operation of the citizens by having
them contribute money for the purpose of investing in factory
sites which will be at the disposal of the Board of Trade, to
give to companies that are looking for a factory location.
Sometimes promoters can interest a group of citizens to col-

1 "Cotton Mills of South Carolina," pp. 185, 186, quoting Mr. J.
T. Rhett, Sec'y* Spartanburg Chamber of Commerce.

46 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

lect sufficient funds to purchase a site for their enterprise.
Of course the citizens who will be interested in securing a
factory site and are willing to contribute, will be the ones
most likely to form the membership of a local Board of
Trade; but this is not always necessarily true. The differ-
ence between the Board of Trade's action and the citizens'
action is that the one is a systematic endeavor, while the
other is an occasional one. In some cases the town itself
may appropriate money to secure factory sites; and, in some
other instances, a private citizen may give a piece of land
for the same purpose. It is far more common, however, for
the land to be contributed by the Board of Trade or the citi-
zens acting as a body on some special occasion.

(2) Free Building. — Some years back it was not uncom-
mon for the Boards of Trade and other organizations to en-
courage the location of factories by providing buildings.
This building might be given outright to the factory OTVTiers,-
but more usually the arrangements were as follows: The
townspeople were informed what type of building was de-
sired, and they would erect the structure according to the
specifications and then lease the building to the promoters of
the enterprise for a sum of money which might or might not
be nominal. It, at any rate, would be comparatively low.
At the termination of the lease, the factory managers then
had the option of buying the building for a fixed sum pro-
vided for in the contract, and usually they willingly paid
this amount.

(3) Exemption from Taxes. — Tax exemption is probably
the most common form of concession given to prospective
manufacturers. The release from tax payments extends from
one year to a decade, and in some cases even longer, although
the latter is not common. This tax exemption as a rule
means only municipal tax. It does not relieve the concern
from the pajTuent of state or county levies.

(4) Subscriptions to Stock. — Sometimes the citizens in

THE IDEAL SITUATION 47

a community are not only anxious to have various kinds of
factories locate within their borders, but are willing and even
desire to invest in a proposed scheme if the promoters will
locate in their vicinity. Frequent instances are on record in
which some enterprising individual has enlisted the support
of a community and put up a plant with the money supplied
either wholly or in part by the residents. The residents may
make various kinds of agreements with the promoters. In
some cases the promoter becomes merely the managing em-
ployee of the concern, being remunerated by regular salary;
and in case the plant is a success, he is given, at the end of
a certain time, a percentage of the capital stock by vote of
the board of directors. At other times the inhabitants sub-
scribe to the stock and become stockholders in the firm, but
do not have sufficient control of the enterprise to have more
than one or two representatives on the board of directors.

(5), (6) Cash Bonus and Miscellaneous Favors. — In
some rare cases communities offer cash inducements. An
illustration of such a concession is afforded in Urbana,
Illinois. When the Big Four Railroad Company desiiod to
build its car and repair shops for the Peoria division, the
to^vns along the line started an active competition. Urbana
secured the shops by offering a bonus of $40,000.

Other inducements granted are sometimes free gas, or free
power for a limited period of time. One town put a fire-
fighting system into a plant as one of its inducements. The
citizens of another town are now contemplating the building
of a belt line to connect competing railroads, and are offer-
ing factory sites at a very moderate cost along the proposed
belt line. There are numbers of other inducements of a
minor nature, all of which are given to secure an industrial
population.

These artificial inducements are not peculiar to any sec-
tion of the country, nor to either country, suburbs, or city,
although it is more common for the country or small town
6

J8 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

communities to make the offers than for the large centers of
population, ^\^len a person is contemplating the building
of a factory, it is well indeed for him to secure all the possi-
ble concessions and inducements that a district will yield;
but if the natural advantages are not present, it is a poor
plan to take advantage of some extraordinary offer. The
artificial inducement may give the organization a start; but
unless the natural factors are also present, it can do nothing
more, and the plant will then have to struggle along under
a severe handicap and must eventually fail. The artificial
factors should be considered only when they supplement
natural advantages, and should never be the determining
consideration in making a factor^^ location.

CHAPTER V

BUSINESS CONCENTRATION AND INTEGRATION

Within the past decade, there has been in the United
States a remarkable development of industrial activities.
The year 1898 marks the opening of the era of widespread
plant consolidations. Between that time and June 80, 1900,
of the 185 industrial consolidations which then controlled
2,040 active plants, no less than 112 had been consummated
within those thirty months.^ In Moody'' s Manual for the
year 1908 there are recorded about 400 industrial organiza-
tions which, if we include the bonded indebtedness, have a
capitalization exceeding $5,000,000,000. The total invest-
ments represented in industrials in the United States is no
less than $12,686,000,000.2 When we consider the enor-
mous nmnljer of plants and establishments these investments
must represent, and realize that stockholders are ever clamor-
ing for dividends, we can appreciate the fact that successful
managers must be in great demand.

No one can reasonably hold a person responsible for the
successful running of an enterprise unless the organization is
in such a condition that the person in charge can have a fair
chance to administer the affairs of the firm profitably.

The capitalization of prospective earnings has been one

^Cf. Twelfth United States Census, Manufactures; Bulletin No.
122, December 30, 1901, Industrial Combinations, pp. 2 and 3. Also
of. Twelfth Census, Vol. VII, Manufactures, Part I, p. Ixxvi.
The discrepancy is probably due to the discovery of some errors in
the former volume.

^Statistical AbstroQtf 1909, p. 192.

50 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

of the most fruitful causes of industrial shipwrecks. Enter-
prising promoters have endeavored to assure the prosperity
of their projects by concentrating into one organization all
the larger rival interests, thus obtaining a practical monopoly.
In some instances this scheme has turned out successfully;
in others, the subscribers to the projects have found the
schemes to be merely expensive methods of purchasing richly
engraved paper.

A plant to be a profit-making investment should be able
to manufacture goods at the least possible outlay, and dis-
pose of them to an ever-ready market. It should not be bur-
dened with a load of fixed charges in the way of a heavy
bonded indebtedness or preference dividends, neither should
its official salary list be unduly large nor its administrative
expenses excessive.

If a promoter regards a proposition merely as a device to
inveigle money from the confiding public, he will not concern
himself seriously about the soundness of the corporation's
standing, provided he is able to sell its securities, and is
safe from criminal prosecution. Sound business policy does
not consist in gathering together a heterogeneous lot of
plants and factories to create a large corporation. The size
of the company should be a mere incident in the general
scheme of instituting a profit-making creation. Indeed, to
increase the size without at the same time acquiring compen-
sating advantages weakens the company. The burdens of
management are heavily increased unless the widening scope
of the plant's activities means possibilities of obtaining
cheaper raw materials, of developing less expensive means of
production, or of obtaining better and more secure markets.

Financiers should carry out the idea of business integra-
tion rather than that of excessive concentration. Business
integration is the process whereby the o-wners of an enterprise
secure a more or less complete control of all the steps of
manufacturing and distributing a commodity from the raw

BUSINESS CONCENTRATION AND INTEGRATION 51

materials to the finished product.^ Concentration, on the
other hand, means the assembling of like plants 'for the
purpose of eliminating selling competition.^ Consolidation
means a combination of both integration and concentration.
All large corporations are to some extent a combination of
both integration and concentration; but as a general proposi-
tion no combination can be secure in its position unless some
form of integration is dominant in its consolidating process.
In our recent development there have been brought to
prominent notice five classes of consolidation, and each one
has many successful concerns represented in its ranks. These
classes may be stated as follows : .

1. The complete integration of the manufacturing pro-
cess, wherein the product is made under the direction of one
management from the securing and preparing of the raw
material to the placing of the finished goods on the market.

2. The integration of conveyance and manufacturing,
and the concentration of factories. Here the producer does
not own the sources of raw material, but controls the cheap-
est possible means by which raw materials can be conveyed
from the sources of supply to the manufacturing plants
where he carries on the manufacturing process through every
possible phase to the making of finished products from the
raw materials.

3. An integration and concentration of factories and dis-
tributing houses. In this case, the manufacturer does not
own, neither does he control, the sources of supplies or the
transportation facilities. He builds or acquires plants which
are specially adapted to handling the products of various sec-

^Cf. "The Integration of Industry in the United States," by
William Franklin Willoughby, Quarterly Journal of Economics,
November, 1901, Vol. 16, pp. 94-115.

^Cf. "The Concentration of Industry in the United States," by
William Franklin Willoughby, Yale Review, May, 1898, Vol. 7, pp.
72-94.

52 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT
f

tions where the raw commodities are made. The presence of
these large plants in a community does not necessarily imply
that the organization will force unfair price concessions from
the producers of the raw goods. In fact, it may even raise
prices, but in so doing it is assured that rival concerns must
pay at least an equally high amount for the same or for even
an inferior quality. In addition to securing the goods on
this basis, the firms further guard themselves by developing
great selling departments by which they reach the consumer
directly, and always keep an outlet for their manufactured
products.

4. Integration wherein the manufacturers secure profits
by utilizing all possible by-products which may be derived
as the primary commodity is being made.

5. Integration and concentration wherein the product is
protected by patents and distinguishing trademarks, and a
market is created for the goods by wide-spread advertising.
As the market expands, plants are erected at strategic points
to facilitate selling and lower distributive expenses.

The United States Steel Corporation is the classic exam-
ple of the first of these combinations. When it was organized
in 1901 it included thirteen different organizations in part
or whole, and since that time it has acquired no less than
twenty large corporations. If we examine into the properties
that have been acquired by the steel corporation, we shall
note one feature that reflects the profound judgment of the
moving spirits in that great organization. In every case
where an acquisition has been made, the properties acquired
have been ones which will contribute to the importance of
the organization in one of several ways.

1. Give it better supplies of raw material which will be
used in the manufacture of iron and steel products.

2. Give it better transportation facilities and cheaper
means of bringing the raw material to the furnaces and mills,
and likewise of taking the finished product away.

By courtesy oj the United Statea Steel Corporal

BUSINESS CONCENTRATION AND INTEGRATION 58

8. Give it an outlet for its own products by making fin-
ishing plants which will change its unfinished goods into
commodities that can be directly consumed.

4. Give it control of complete units which are situated at
strategic points with respect to market and raw materials.
The map (Fig. 5) shows the extent of the corporation's
properties and the types of plants and jjossessions it holds.

Even if we are skeptical of the high values placed upon
the following inventories, we cannot fail to be impressed
with the tyi^es of properties. The industry is completely in-
tegrated. The following tables have been taken from Mun-
sey^s Mafjazine and the "Eighth Annual Report of the Steel
Corporation." The first one shows an inventory of the
properties of the corporation. The second one compares the
production of the properties for the years 1908 and 1909.
In looking over the first table we are struck by the mere
physical bigness of the corporation. The second one gives
us an insight into its multitudinous activities. In the one
we see the possession of all material necessary to change
crude material into any grade or kind of finished material,
from pig-iron into the most highly finished steel product.
The second table shows us what these plants produce. It
tells us that the corporation is ready to market all kinds of
materials.

AN INVENTORY OF THE PROPERTIES ^

Ore and Mining Timber Properties

Unmined ores located in the Lake Su-
perior districts on the Marquette, Meno-
minee, Gogebic, Vermilion and Mesaba
iron ranges, and in the Baraboo district,
Wisconsin, in all an estimated tonnage of
1,182,815,200 tons of all grades, exclusive
of the Great Northern ores, at sixty
cents per ton $709,689,120

^ This inventory appeared in Munsey's Magazine, June, 1908^
and. is quoted by permission of Mr. Frank A. Munsey.

54 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

Brought Forward $709,689,120

Mining plants, improvements and devel-
opment work, at active mines, including
mine and stripping equipment, tracks,
etc., and cost of removing overburden
from ore not yet mined, mine dwellings,
etc. 23,432,886

Timber property— 803,868,000 feet of
standing, mining, and saw-log stock ;
1,461,000 cords of logging, pulp wood
and cord wood ; 191,837 acres of land —
all located on above named iron ranges. . 5,744,011— $738,866,017

Coal and Coke Properties

Unmined coking coal in the Connells-
ville region, Pennsylvania — 60,003 acres
owned (coal only, not including surface),
1.515 acres leased on royalty basis, also,
21,100 acres of surface ; and (of which
750 acres are river front) owned in con-
nection with foregoing 93,656,200

Unmined coking coal in the Pocahontas
region. West Virginia — 65,497 acres land
leased — valuation Id equity above royal-
ties 3,274,850

Unmined steam and gas coal in the Pitts-
burg district in Pennsylvania, in Ohio,
Indiana, and Illinois— 30,252 acres owned
(coal only, not including surface), 3,548
acres leased on royalty basis ; also, 998
acres of surface land owned in connec-
tion with foregoing 8,898,828

Coking plants, comprising 20,225 ovens
in the Connellsville region and 2,151
ovens in the Pocahontas region, including
mine openings, shafts, slopes, tipples,
power-plants, mine and over tracks, and
all machinery and equipment in connec-
tion with the mining and coking of coal
at the above plants ; also, complement
of tenement-houses for employees 29,875,150

Coal mining and shipping plants at mines
in the Connellsville and Pittsburg dis-
tricts, not constructed in connection with
coking plants 2,741,412

garriQd ForwM ..,,...,,.,..,,,.. .$138,446,440 $738,866,017

BUSINESS CONCENTRATION AND INTEGRATION 55

Brought Forward $138,446,440 $738,866,017

Miscellaneous, including standard-gauge
railroad equipment (6 locomotives, 700
steel cars, and 1,694 wooden cars), op-
erated in connection with the foregoing
properties ; water-pumping stations, pipe
lines and reservoirs ; shops, office build-
ings, stores, telephone-lines, live stock,
etc 4,393,339— 142,839,779

Limestone and Natural Gas

Unquarried limestone located at various
places in Pennsylvania, West Virginia,
Ohio, Illinois, Wisconsin and Michigan,
at an estimated valuation of about three
cents per ton, including quarry equip-
ment 2,619,529

Gas territory in Pennsylvania and West
Virginia (leased), in all 208,985 acres, on
which there are 376 gas wells and 5 oil
wells, with about 600 miles of pipe lines,
12 pumping stations, telephone lines, field
equipment, etc 10,360,940— 12,980,469

Transportation Properties

Standard gauge railroad lines, including
the Bessemer & Lake Erie, 233 miles ;
Chicago, Lake Shore & Eastern, 282
miles ; Duluth & Iron Range, 229 miles ;
Duluth, Missabe & Northern, 274 miles ;
.Elgin, Joliet & Eastern, 230 miles, and
other lines, 107 miles — in all, 1,355 miles
of main lines and branch lines, with 298
miles of second tracks and 659 miles of
sidings and yard tracks, but exclusive of
docks and equipment 91,517,750

Railroad equipment— 692 locomotives and

37,902 cars of various classes 42,348,825

Eight forwarding ore-docks on Lake Su-
perior and two receiving ore-docks on
Lake Erie, including equipment 7,396,700

Seventy-six ore and freight carrying
steamers and twenty-nine barges, plying
on the Great Lakes, with a total carrying
capacity of 635,250 tons of iron ore 21,440,700— 162,703,975

Qarri^d Fon^^a^d ,,,,...,,, ,.,.,.,,,,,,,,,,,,,..$1,057,390,24Q

50 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

Brought Forward .$1,057,390,240

Manufacturing Properties {Exclusive of

Gary, Indiana)
Furnaces, mills, and factories, number-
ing in all 145 separate plants, including
the sites (a total area of 8,089 acres),
and all equipment and appurtenances
other than manufacturing supplies and
product on hand 382,248,897

Gary, Indiana, Plant

Actual expenditure to January 1, 1909,
for the real estate, about 9,000 acres ;
for construction work on the new steel
plant, for development and construction
work in the city of Gary, and for connect-
ing railroad work 24,063,388

Stind7-y Real Estate
Situated contiguous to manufacturing
plants and improvements thereon (prin-
cipally dwellings for employees) ; also,
unimproved tracts of land owned, avail-
able for manufacturing sites and for
terminal railroad and dock facilities, etc.
Value of real estate, exclusive of im-
provements thereon $4,975,900

Improvements thereon 1,719,073 — 6,694,973

Tennessee Coal & Iron Company
Including ore, coal, manufacturing plants
and general equipments of a complete
and independent steel manufacturing con-
cern 50,000,000

Net Liquid Assets, December 31, 1907
Includes cash, and accounts receivable,
inventories and investments, in excess of
current liabilities 26i,789,885

Total $1,782,187,383

The production of the several subsidiary properties for the year
1909, compared with the results for the year 1908, was as follows : ^

'Quoted from page 17, Eighth Annual Report of the U. S. ^teel
Corporatioik'

BUSINESS CONCENTRATION AND INTEGRATION 57

Products.

Iron Ore Mined.

Marquette Range

Menominee Range

Gogebic Range

Vermilion Range

Mesaba Range

Tennessee Coal, Iron & R. R. Co.'s Mines

Total

Coke Manufactured.

Bee-Hive Ovens

By-Product Ovens

Total

Coal Mined, not including that used making coke
Limestone Quarried

Blast Furnace Production.

Pig-Iron

Spiegel

Ferro-Manganese and Silicon

Total

Steel Ingot Production.

Bessemer Ingots

Open Hearth Ingots

Total

Rolled and Other Finished Steel Products for Sale.

Steel Rails

Blooms, Billets, Slabs, Sheet and Tin Plate Bars

Plates

Heavy Structural Shapes

Merchant Steel, Bars, Hoops, Bands, Skelp, etc.

Tubing and Pipe

Rods

Wire and Products of Wire

Sheets— Black, Galvanized and Tin Plate

Finished Structural Work

Angle and Splice Bars and Other Rail Joints . .

Spikes, Bolts, Nuts and Rivets

Axles

Steel Car Wheels

Sundry Steel and Iron Products

Total

Spelter

Sulphate of Iron

Universal Portland Cement

1909

1908

Tons.

899,002

830,087

1,359,415

1,021.598

1,312,701

1,078.025

1,066,474

927,206

16,968,592

11,272,397

1.824,863

1.533,402

23,431,047

16,662,715

11,896,211

7,591,062

1,693,901

578,869

13,590,112

8,169,931

3,089,021

3,008,810

3,496,071

2,186,007

11,436,570

6,810,831

80,942

74,716

100,838

48,861

11,618,350

6,934,408

5,846,300

4,055,275

7,508,889

3,783,438

13,355,189

7,838,713

1,719,486

1.050.389

675,614

551,106

729,790

312,470

658,516

313,733

1,290,970

577,591

1,013,071

654,428

139.149

93.406

1,607,689

1.275,785

1,024.985

770,321

530,766

403.832

190,226

84,669

72.076

40,252

68.366

24,057

67,985

7.223

70.971

47.670

9.859,660

6,206,932

27,853

28,057

33,582

26,411

Bbls.

5,786,000

4,535,300

58 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The United States Steel Corporation, with its tremendous
possessions, is capable of controlling about 60 per cent of the
steel output of the country. If its rivals should ever begin
an aggressive onslaught on its markets, the company could
easily defend itself by meeting all cuts in prices. Indeed,
with its great possessions and equipment, the United States
Steel Corporation could carry warfare into the enemy's camp
and reduce prices to a ruinous figure for all outsiders.

In spite of a number of strong temptations the company
has pursued a very commendable price policy. After the
1907 panic the Steel Trust was the last concern to attempt to
secure orders by cutting prices, and it finally lowered only
as a measure of self-defense against secret reductions of the
independent rivals.

The company has solved its market problem by securing
control of the raw materials and the transportation facilities,
and by placing complete producing units in such positions
that they are accessible at many consuming points.

The Standard Oil Company is the best representative of
the second type of consolidation. This organization obtains
its raw materials by leasing oil lands and securing exclusive
purchase options on the output of oil fields. It does not
attempt to buy outright great stretches of oil-producing
territory, but rather seeks to maintain its position by devel-
oping along two lines, viz. :

1. It has obtained the best and cheapest means for the
handling and the transportation of petroleum from the fields
to the refineries, and from refineries to the markets.

2. It has the most complete set of refineries in existence,
and has located them at strategic points throughout the
country.

In the distribution of petroleum the Standard Oil Com-
pany employs 8,000 miles of trunk pipe lines, with 75,000
miles of feeders from wells ; storage tanks for crude oil, hold-
ing 82,000,000 barrels J 10,000 tank cars in America and

BUSINESS CONCENTRATION AND INTEGRATION 59

2,000 abroad; 60 bulk steamers for ocean traffic and 12 for
foreign coasting trade, with 150 steamers and barges at
home; 3,000 tank stations in America and 5,000 elsewhere.^

The managers of the concern have developed refining
apparatus which makes feasible every possible saving, and
enables the preparation of all by-products. The process of
manufacture does not end with the mere making of the oil.
The cans which are destined to carry illumination into the
peasant huts of rugged Italy, and the barrels which will hold
lubricant for the shops of our own mid-continent are all
made in the refineries.

The map (Fig. 6) on the following page is compiled from
the report of the Commissioner of Corporations, entitled
"The Transportation of Petroleum." On it are shown the
location of the refineries of the Standard Oil Company and
its competitors, and likewise the oil fields, pipe lines, and
the territory supplied by the refineries of the Standard Oil
Company. It is interesting to note the advantage that the
Standard Oil Company takes of water transportation wher-
ever it is possible. The seaboard territoiy has its most im-
portant points at Portland, Me., Boston, Providence, New
London, Wilson Point, Conn., Richmond, Wilmington,
Charleston, Savannah, and Jacksonville, all reached by boat.
From these ports the oil is distributed inland to the local
territories by rail.

The following excerpt is from the text of the report above
cited : ^

"Advantages Due to Geographical Distribution of Re-
fineries.— The great advantages which the Standard Oil Company
enjoys over its competitors with respect to transportation are un-
doubtedly in part the direct outgrowth of the enormous scale on
which it conducts business and of the favorable location of its re-
fineries. They are in some degree, at least, natural advantages.

1 Cf. Moody's Mamml, 1909, p. 2786.
* "Transportation of Petroleum," p. 60.

•PI ".'J

BUSINESS CONCENTRATION AND INTEGRATION 61

Disregarding the question of the origin of the power of the Stand-
ard Oil Company, and considering only its present position, the
advantages which it possesses with respect to transportation are
certainly in part independent of any present discriminations from
railroad companies.

"In the first place, the fact that the Standard Oil Company has
numerous refineries gives it a marked advantage over the compet-
itor who has only one. Even were it not for the transportation
of crude oil by trunk pipe lines to long distances, and if the refin-
eries were all in or near the oil fields, by having several refineries
the Standard Oil Company would still be nearer to many markets
than its competitors. Thus, by operating refineries in the oil fields
of Pennsylvania, Ohio, Texas, Kansas, Colorado and California, it
could supply each section of the country from the nearest plant,
and could save much in the cost of transportation as compared
with a refiner restricted to a single distributing point.

"Advantages Due to Pipe Line Transportation.— This ad-
vantage of location is, however, very greatly increased by the use
of trunk pipe lines to transport crude oil to refineries much nearer
to great centers of consumption than the oil fields themselves.
The Standard operates enormous refineries at the sea-board. These
are much nearer to several great centers of population than the
majority of competing refineries, and they also offer the advantage
of water transportation to a large area. Similarly, the Standard's
great refinery at Whiting is several hundred miles nearer to the
markets of the West than most of the independent refineries.

"The advantage of the location of the sea-board refineries, and
of the Whiting refinery, grows out of the fact that the cost of pipe
line transportation to them from the oil fields is much less than
the cost of rail transportation, which the competitors have for the
most part to pay in order to reach the same points."

This quotation has added significance, because it is taken
from a document hostile to the Standard Oil Company. The
report clearly shows that the founders of the organization
saw two things : the importance of developing the cheapest
methods of transportation and the advantages of strategic
locations. It is those two factors which will account for
its permanent success.

An excellent illustration of the third class of consolida-

62 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

tion is afforded by the American Tobacco Company. This
concern, according to the report of the Commissioner of Cor-
porations in 1909, consists of eighty-six companies which
have an aggregate capitalization of over $450,000,000, in-
chiding bonds. This would be reduced to the net amount of
$316,000,000, of stocks and bonds in the hands of the pub-
lic if we were to eliminate duplication of intercompany
ownership of securities.^ The American Tobacco Company
began its monopolistic combination in 1890 with the union
of the five principal cigarette manufacturers in the country,
in this way securing control of 90 per cent of the cigarette
business of the United States.

In 1891, it began the policy of extending its dominion
over other fields of the tobacco industry. By 1894, it started
a vigorous campaign to secure the plug-tobacco business,
and by 1898 the competitors of the American Tobacco Com-
pany were willing to be absorbed. After it had secured con-
trol of the cigarette and plug business, a powerful group of
financiers, among whom were Thomas F. Ryan, P. A. B.
Widener, and others bought up the Blackwell's Durham To-
bacco Company, which was an important manufacturer of
smoking tobacco, and the National Cigarette Tobacco Com-
pany. In addition to those companies, they had secured an
option on the controlling interest of the Liggett & Meyers
Tobacco Company, the control of which was exceedingly im-
portant to the American Tobacco Company. The American
Tobacco Company at once realized the importance of the
movement, and willingly made concessions by which this
new combination was made a part of the old. A further
integration and concentration was made in 1900 by the ac-
quisition of the American Snuff Company, which iiicluded
all the important American and Continental companies doing

1 "Report of the Commissioner of Corporations on the Tobacco
Industry," Part I, p. 1,

BUSINESS CONCENTRATION AND INTEGRATION 63

business in this country. Further .absorption was brought
about in 1904, when the foreign tobacco interests became a
part of the American Tobacco Company.

In 1901, the tobacco combination took another step to-
ward integration by the organization of the American Cigar
Company. By 1906, it had about 15 per cent of the cigar
output of the United States; but it has not been so suc-
cessful in dominating the cigar business as it was in the
cigarette, smoking tobacco, plug tobacco, and snuff busi-
nesses.

In 1898, the tobacco combination, to secure for itself a
sure means of distributing its goods, started the policy of
subsidizing jobbing houses and wholesalers. By 1906, it
owned stock in the following corporations engaged in jobbing
cigars and tobaccos : ^

M. Blaskower Company, San Francisco, Cal.

R. D. Burnett Cigar Company, Birmingham, Ala.

Cliff Weil Cigar Company, Richmond, Va.

J. & B. Moos, Chicago, 111.

J. & B. Moos Company, Cincinnati, Ohio.

Le Compt, Dusel & Goodloe, Philadelphia, Pa.

J. J. Goodrum Tobacco Company, Atlanta, Ga.

Louisiana Tobacco Company, New Orleans, La.

Smokers' Paradise Company, Atlantic City, N. J.

Jordan, Gibson & Baum, Memphis, Tenn.

Not only has the American Tobacco Company entrenched
itself in the jobbing business, but it has even gone farther
by securing the control of powerful retail stores. In 1901, a
concern by the name of the United Cigar Stores Company
was incorporated in New Jersey. In 1906, it had an out-
standing capital of $1,950,000, of which the tobacco combi-
nation held all the preferred stock and bonds and $340,000

^ "Report of the Commissioner of Corporations on the Tobacco
Industry," Part I, p. 311.
ft

64 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

of common stxack, leaving only $110,000 of common stock
outside of its control. In addition to the United Cigar Stores
Company of New Jersey, the American Tobacco Company
was controlling, through the United Cigar Stores Company,
the following svibsidiary corporations : ^

United Cigar Stores Company (Incorporated), of Illinois.

United Cigar Stores Company (Incorporated), of Rhode
Island.

United Cigar Stores Company Agency.

The Royal Company.

Moebs Cigar Stores Company.

\¥illiam Baeder & Co.

United Merchants Realty and Improvement Company.

The total number of stores owned and controlled by these
companies, including the parent company, amounted, in

1906, to 892.2 jjj addition to this there were a number of
premium stations, depots, and the National Cigar Stands
Company, which was closely affiliated with the American
Tobacco Company by heavy loans .made by the latter com-
pany. The National Cigar Stands Company on March 2,

1907, had 2,062 contracts in force with retail druggists
throughout the country. ^

I'his does not complete the retail connections controlled
by the Tobacco Combination. Jobbing houses do a retail
business in connection with their other affairs, and they are
very closely affiliated with the large corporations. The most
important of these concerns are the Acker, Merrall & Condit
Company of New York City, which operates ten stores in
New York and has branches in Asbury Park, Baltimore,
Md. , Far Rockaway, Flushing, Greenwich, Conn. , and seven
other stores in the immediate vicinity of New York City.

^ "Report of the Commissioner of Corporations on the Tobacco
Industry," Parti, p. 312.

2 Ibid., p. 313. 3 Ibid., p. 316.

BUSINESS CONCENTRATION AND INTEGRATION 65

Besides the Acker Company, the Tobacco Combination con*
trols : *

Cliff Weil Company (Incorporated) , Richmond, Va.

J. J. Goodnim Tobacco Company, Atlanta, Ga.

R. D. Burnett Cigar Company, Bimiingham, Ala.

Le Compt, Dusel & Goodloe, Philadelphia, Pa.

Further integration of the Tobacco Combination's busi-
ness is evident in its ownership of concerns which manufac-
ture tobacco accessories. The following list of companies
engaged in contributory enterprises, in addition to the above
mentioned, is taken from the commissioner's report: ^

Mac Andrews & Forbes Company, Manufacturers of Lico-
rice Paste. They have almost a complete monopoly of this
important raw material for the tobacco business.

Mengel Box Company.

Columbia Box Company.

Tyler Box Company.

Golden Belt Manufacturing Company.

Conley Foil Company.

Johnston Tin Foil and Metal Company.

American Machine and Foundry Company.

New Jersey Machine Company.

International Cigar Machinery Company.

Standard Tobacco Stemmer Company.

Garson Vending Machine Company.

Kentucky Tobacco Product Company.

Kentucky Tobacco Extract Company.

Manhattan Briar Pipe Company.

Baltimore Briar Pipe Company.

Amsterdam Supply Company.

Thomas Cusack Company, a bill-posting concern.

Florodora Tag Company. ^

^ "Report of the Commissioner of Corporations on the Tobacco
Industry, " pp. 315, 316.

2 Ibid., pp. 16, 17. 8 Ibid., p. 24, bottom.

66 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

In looking over this list of factories and enterprises whicl]
the Tobacco Combination owns and controls, one cannot help
being impressed with the substantial unity of its acquisi-
tions. Those factories which do not make some form of
tobacco, manufacture something which is exceedingly useful
for the tobacco producer. The tin-foil comj^any make the
wrapping for the various kinds of products. The box com-
pany's entire product is used in casing the output. The
various ingredients necessary for the production of the to-
bacco are likewise under their control, as one can see from
their ownership of the licorice business. "When it comes to
distribution, it o-v\tis not only stores, but advertising con-
cerns. The Florodora Tag Com^^any formerly did an im-
mense business in the distribution of premiums. When it
does not actually make the products it takes means to secure
the raw materials at the lowest possible cost. The Amster-
dam Supply Company was organized for the sole purpose of
acting as a purchasing agent for the American Tobacco Com-
pany.

The by-product type of integration must have two essen-
tials before a firm can afford to spend money on equipment
to work up its subsidiary material.

1. It must have the assurance that the market condi-
tions wdll be such that the by-products will always have a
ready sale.

2. It must have a main industry sufficiently large to
provide enough material to keep the by-product plants con-
tinually running.

As a consequence those industries that have developed
the by-product features are almost invariably large concerns,
and they are usually very active in developing their business
by various schemes to keep their names before the public
and create a demand for their goods.

The beef-packing industries present the most widely
known ejtamplQ of the by-product type of integration.

BUSINESS CONCENTRATION AND INTEGRATION 67

Merely to mention the by-products obtained in the course
of slaughtering is a task in itself. The average live weight
of a beef is between 1,000 and 1,100 pounds, while the
dressed weight ranges between 575 and 650 pounds. * Within
a recent period, only the hides and tallow of the 450 pounds
of non-edible material were saved. At present every ounce
of this waste product is compelled to yield some tribute to
the packer. From the horns and hoofs are made various
grades of glues, buttons, and hair-pins, and they are made
the basis for the manufacture of cyanide and chrome. The
albumin in the blood is used to make an insoluble printers'
ink. It is also used by tanners to finish leather, and by sugar
refiners to make possible the inviting whiteness of their
product. Dried blood, bones, tankage, and the ground waste
of hoof and horn scraps make a fertilizer rich in nitrogen
which, when combined with acid phosphate, becomes the
source by which otherwise infertile soil is made to bring
forth the necessaries and luxuries of our tables. The wool
from the packing-house sheep is made into fabrics to clothe
us, but before it is given to the textile worker, the oil is ex-
tracted, making the non-shrinking basis of wool soap and
also the essence of various soothing skin lotions and toilet
preparations designed to beautify the users. If we are sick,
our jaded appetite may be tempted to accept gelatine ex-
tracted from the bones of calves ; if convalescent, our system
may be induced to increase in strength by absorbing "Solu-
ble Beef," the predigested and concentrated substance of
meat. The intestines of the animals are the casings for sau-
sage which is made from meat otherwise unsalable. The
gun we carry on a hunting trip is hardened with bone car-
bon, the handle of the knife which we use to dress our game
is from the packing house. If camp fare disagrees with our

* " Report of the Commissioner of Corporations on the Beef In-
dustries," pp. 202, 203.

68 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

stomach, we can vary our diet with beef extract and allay
the pains of indigestion with pepsin and pancreatin. The
baby starts out in life using a bone-capped nursing bottle
and teething ring. If in later years nature proves niggardly
in her gift of hair, the switch on the end of the beef's tail
will be offered to supply the deficiency. Collar buttons, pipe
stems, and dice, brewers' isinglass, and brushes, soap and
glycerine, washing powder, and sand paper are all products
sent forth from the various departments of these great con-
cerns. So minutely has the by-product feature been carried
out that the glands of 100,000 sheep are carefully preserved
and treated to produce one pound of suprarenalin, a sub-
stance whose astringent qualities have proven invaluable in
delicate surgical operations.-'

The National Biscuit Company and the Singer Manufac-
turing Company are two good examples of the fifth type of
integration. Both concerns have fortified every distinguish-
ing feature and improvement about their articles by patents
and trademarks. Both concerns have been very careful to
guard the quality of their goods, and neither forgets that
advertising is necessary for publicity. Each one has built
plants at various places to make easier the distribution of
products to the consumers located in various districts.

The National Biscuit Company has sixty manufacturing
plants situated at various points in the United States. 2 The
Singer Company has plants not only in the United States,
but also in Canada and Scotland.^ It is a common practice
for concerns to erect plants in foreign countries when duties
on their products are high, because in so doing they avoid
the tariff charges, and are thus able to compete with the
foreign manufacturers on more equal grounds.

^Cf. "The Packers, the Private Car Lines and the People," by
J. Ogden Armour, Chapter IX, p. 201.
^Moody's Manual, 1908, p. 2397.
3Ibid.. 1908, p. 2517.

BUSINESS CONCENTRATION AND INTEGRATION 69

In actual practice almost every large concern is success-
ful, because it has utilized to a greater or less extent several
of the above-mentioned methods of integraiion. None of
the companies in the above illustrations are successful ex-
clusively because of their characteristic type of integration.
The United States Steel Corporation, for instance, derives a
large part of its income from its extensive by-product manu-
facturing, while the packing houses are exceedingly careful
to cultivate every possible market. They advertise their
goods broadcast, and have their agents everywhere drum-
ming up trade.

The question that the directors have to decide is, how far
shall we push expenditures along any one line of consolida-
tion? Will a thousand dollars spent in improving the
methods of manufacture give as large a return as the same
amount spent in advertising? Will lowering the cost in-
crease our trade or profits so much as changing our selling
methods or securing control of raw materials?

In the last analysis, all of these consolidations seek to do
one thing — to secure sufficient control of the market to assure
the manufacturer a profitable outlet for his goods. Some
types of industries can secure this control most readily by
obtaining the sources of raw materials, some by cutting
factory costs, and others can get it only by developing the
selling dex^artment to a high degree of efficiency. All are
struggling for the patronage of the public, and the strongest
appeal any one of them can make is to give the best value
for the lowest price. When one secures control of the raw
materials, he can make the lowest price in any community
simply by compelling his rivals to pay a higher amount for
the crude products. If, however, the supply of raw materials
is such that all can purchase on an equal footing, the firm
which can manufacture with the least cost is in the strongest
position to gain the market, provided all other things are
equal. In many instances, the best methods of carrying on

70 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

an industry are so generally known that the rival interests
have little or no advantage over each other in that respect.
In those cases, the victory goes to either the one who hat,
lowest distribution expenses and sells the cheapest, or to the
one who by judicious advertising or other means secures a
reputation for giving superior quality for standard prices.

CHAPTER VI

BUSINESS SPECIALIZATION

In the last chapter it was stated that consolidation could
take place in the field of raw materials, manufacturing and
selling. To secure control of raw materials is a financial
problem that requires a different solution in every individual
case. The manufacturing and selling phases of any business
must be handled after the plant has been located and con-
structed. In another chapter it will be shown that even the
most economical construction of a plant is almost entirely
dependent ui^on the peculiarities of the processes that go on
under the roof of the structure.

The university of a generation ago liad few departments,
as a rule; but those departments taught a great many
branches. At that time a man could be Professor of Natural
Philosophy, and within that domain he gave instruction in
Geology, Chemistry, Physics, Physical Geography, Miner-
alogy, Meteorology, and perhaps a half dozen other allied
branches. A professor of Political Economy would be likely
to teach Economic History, Economic Theory, Public Fi-
nance, Private Finance, Transportation, Sociology, and an
almost indefinite number of the derived topics. How differ-
ent is the university of to-day. Natural Philosophy has
vanished from all curricula. Even geology is broken up into
Historical Geology, Paleontology, Inorganic Geology, and a
half dozen other subdivisions. He is a bold man who pre-
tends to know more than one or tn^o of those subdivisions
with any great degree of completeness. The science of Politi-
1J9I Economy h^s^ been broken up into Economics and Sociol-

72 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ogy, and in those two orders of social science we find special-
ists who do not care to teach more than one small branch of
their general division. At the present time we have profes-
sors of Transportation, of Insurance, of Farm Economics,
Accountancy, Industrj^, Commerce, Finance, and a host of
others. In the past we had the tendency to hit only the high
places in our sciences. "We were broad but not deep. Our
institutions of learning have carried out the idea of speciali-
zation in education to exceedingly fine limits, and it has
resulted in incalculable good to the cause of knowledge.

While the specialization has been going on in the higher
institutions another movement has been taking place. The
universities are getting into closer and more sympathetic
relations with the high schools, and even with the grade
schools, until, at the present time, in some states the entire
school system is gradually getting welded into one big unit
which has for its object the most perfect training that is
possible to give each child in a community.

Twenty years ago, in the majority of industries, the
plants were about as general in the scoj^e of their work as
were educational institutions. The history of a number of
large concerns that have been in existence for over thirty
years might be cited to show the great changes that have
taken place in the character of their activities. Formerly,
machine shops did every grade of work on the floors of a
single building. One shop in an eastern city built j)rinting
presses, blowing engines, water turbines, marine engines,
mill engines, mining machineiy, pimips; in fact, everything
conceivable in the machinery line for which they could ob-
tain an order.

Textile establishments in days gone oj manufactured a
great variety of fabrics. One concern made ingrain carpets,
Brussels carpets, velvets, suiting material, and many other
types of fabrics. Knitting mills commonly made all kinds
of stockings, underweax, and other knitted goods. Paper

BUSINESS SPECIALIZATION 73

mills of the past turned out all grades of pulp materials,
from the coarsest straw board to the finest writing and draw-
ing papers. Shoe factories never thought of restricting them-
selves to any particular grade or kind of footwear.

At the present time such diversity of activities would be
undreamed of for anyone plant. Machine shops now confine
their energies to the building of one or two classes of ma-
chinery. If a company is engaged in several lines of activ-
ity, it has a special shop or department for building each
commodity. One concern builds nothing but cranes, another
only milling machines, some plants construct planers and
shapers, others locomotives. In the field of electrical equip-
ment, plants may limit themselves to special sizes of certain
goods. One concern now doing a profitable business confines
itself to the building of motors of a few small sizes, and will
not accept orders for larger ones.

In textiles, no thoroughly trained manager would risk
funds in attempting to manufacture a great variety of goods
under one roof. There are mills which confine their energies
to the making of ingrain carpets, others make only rugs.
One firm has invested over $1,000,000 in equipping an im-
mense building whose only output is lace curtains. The
knitting mill has been succeeded by the stocking and under-
wear factories. Some plants have even gone so far as to make
a specialty of either men's, women's, or children's hosiery,
and a few concerns have gone to the extreme limit of special-
ization by making only one or two grades of men's socks.

Shoe manufacturing is known everywhere as a special-
ized business. At present, the greatest factories make either
men's or women's and children's shoes, and not a very great
number of grades at that. Several concerns confine their
energies to the production of one or two qualities of foot-
wear, and endeavor to secure an immense market for their
output by giving the consumer the choice of a great number
of different styles. By specializing their outputs, factories

74 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

can give such excellent quality and style for so low a price
that once established, rivals will find it difficult to break into
their domains.

Like tendencies are evidenced in the paper business. No
longer do single plants manufacture a great variety of pulp
material. Mills are now very apt to specialize on newspaper,
bond paper, wrapping stock, or some particular kind of fiber
goods.

In an almost indefinite number of industries the same
change has taken place. The tendency is not confined to
any selected group of activity. It is the exjDression of an
ideal which is influencing our modern civilization. If we
are to exist, we must conserve our forces. We set aside great
tracts of land for forest reserves, the government is appoint-
ing commissions to draw up plans to husband our coal, vast
sums of money are being spent to make the barren deserts
fruitful fields. The states and the United States support
great agricultural colleges and numerous experimental sta-
tions for the purpose of finding out for the farmer how he
can save his land for future generations and yet get from it
the maximum yield.

In manufacturing, the entrepreneur has long seen that his
rewards depend upon methods of effectively handling raw
materials and labor, and he has hit upon specialization to
attain economy in manufacture. Specialization aids in a
number of ways :

1. It reduces the preliminary costs incurred in all manu-
facturing.

2. It makes possible the extensive use of highly special-
ized machinery, buildings, and other equipment.

8. It simplifies managerial problems.

4. It makes worth while the introduction of numerous
email savings.

Specialization is one of the greatest possible aids to in-
dustrial economy. How this is accomplished, is well illus-

f BUSINESS SPECIALIZATION 75

trated in the building of a steam engine. In order to build a
steam engine of several hundred horsepower in an unspecial-
ized plant, the builders must proceed as follows :

The prospective purchasers of the engine advertise for
bids on engines of the capacity desired, and they give the
necessary data as to the work that the engine is expected to
do. The concern desiring to secure the contract makes out
drawings and sketches showing the type of engine they offer
and the way it will look when comj^leted. On these sketches
the advantageous features of their engines are shown, and
these sketches are frequently painted in water colors. They
always represent considerable work on the part of the draft-
ing department.

If the firm secures the contract, the chief engineer makes
out the general specifications, such as the sizes of the cylin-
ders, the length of stroke, steam pressure, tyj)e of valve gear-
ing, and other main requirements.

The chief draftsman then takes the job in hand and allots
the working out of the various details to under-draftsmen.
These under-draftsmen calculate the amount of material that
must go into the engine, figure out the sizes of the various
parts, and show clearly the proper allowances to obtain the
proper valve movements. They must see that all moving
joints are properly provided with lubricating devices, so that
there wiU be no binding at any point,' yet the movements
must not be so free that leakage of steam can occur in any
place. The throttle-valves and other parts likely to be fre-
quently used must be put in accessible places. Provision for
taking indicator cards must be made, so that it will not be
dangerous for one to make tests of the engine while it is run-
ning. Proper clearance must be provided for all moving
parte. The oiling system should be such that lubrication
can take place without undue waste of oil, and without
involving danger to the attendant. Not only must all of
those parts be looked ^i\^x i^X the engine, so that it can run

76 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

successfully, but care must also be taken to see that its parts
are constructed in such a manner that the engine can be put
together. The writer remembers an instance where several
bolts were so placed that it was impossible to get a wrench
on the nuts. As a consequence, the bolts were useless, but
it fortunately happened that if left-handed. threads were cut
on the bolts the nuts could be tightened, and it was not
necessary to redesign the whole part after the castings had
reached the machine shop.

When the drawings of all the details are made and a gen-
eral drawing showing the placing of all the different elements
is completed, tracings must be made of everything. These
tracings are inked in with great care, the different parts
shaded and the dimensions of every piece indicated. After
the tracings are all completed, every part must be carefully
gone over and checked by some responsible person. This
person is much like a proofreader. He looks out for every
kind of a mistake that can occur, or is likely to happen, in
the construction of the engine; and if he finds any inaccu-
racy, he must report it and see that it is corrected before the
plans leave the drawing-room.

After the tracing is checked and everything is seen to be
correct, the tracings are turned over to the blue-printer, and
a number of blue print coj)ie8 of every drawing in the engine
are made. The blue prints are then turned over to the con-
struction departments.

The first step in building the engine begins in the pattern
shoj). The pattern shop is the place where the vs^'-ious shapes
of the proposed castings are made in wood which will serve
the molders as the basis for the construction of the molds.
The drawings in the pattern shop are first carefully gone over
by the foreman who determines which parts are to be made by
the various workmen. The workmen are then given the draw-
ings and are expected to read them and make from them the
correct form in wood. To do this is no simple matter. A

BUSINESS SPECIALIZATION 77

good pattern-maker possesses, a very high degree of intelli-
gence. The drawings, in the first place, are often very com-
plicated, and it requires considerable imagination to see in
those conventional lines the picture of a form. The work-
men's ingenuity is further tested by the fact that he must
always remember that the wooden pattern must be repro-
duced in metal. The metal that is poured into the molds
made by the patterns is in a molten condition. The pattern-
maker must take into consideration that his pattern must be
so built that after the sand is rammed tightly around it, it
can be withdrawn without spoiling the mold. He must not
forget to make the pattern large enough to give the casting
sufficient material to permit of cutting and trimming in the
machine shop. In the cooling there is considerable shrink-
age of metal, and unless great care is exercised in making
the patterns, cracks will develop in the castings. In the
foundry, the molds must be built to suit the patterns in ques-
tion. Some of the minor molds may be made in casting ma-
chines, but it is hardly worth while to get machinery of that
kind unless a great number of pieces are made.

After the castings have been made, they are cleaned and
passed on to the machine shop. The machine shop foreman
will have in his office the complete set of prints of the engine.
He will have the task of determining the order in which the
various parts shall be finished. He will ascertain the ma-
chines best fitted to carry on the various machining processes
on the different castings. In these machining steps, consid-
erable time is lost in getting the pieces set up on the tools
which are to make the engine parts ready for assembling.
Every time each piece passes to a different tool or to a differ-
ent step in the process, the various workmen in charge of the
steps must decide upon the best way to handle the piece, the
proper cuts to make on it, and, in general, its method of
treatment.

Several years ago there were shops where fuUy 30 per ceufc

78 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

of the time consumed in machining and assembliiig the
parts was used up in preliminary operations. It is true that
some of this time was wasted, but nevertheless, the greater
part of the loss was due to the fact that the firms were work-
ing on new contracts most of the time, and could use little of
the former work and material.

Imagine the same engine going through an establishment
which has been sx^ecially constructed for the purpose of build-
ing engines of that class and horsepower. In the first place,
the engineering and drawing expenses are reduced to an
almost insignificant item for each order, because one set of
drawings with a few alterations does for a number of engines.
The pattern cost for each becomes an almost negligible item
for the same reason. In the foundry it is worth while to
construct special molding devices, which make the molding
cost for each engine much smaller than it possibly can be
when only one or two engines are constructed. In the ma-
chine shop, the foreman can work out a general scheme for
the machining of the parts, and they pass from one tool to
another without the necessity of any special direction. More-
over, tools can be adapted to the special purpose of handling
the engine j)arts. In the locomotive business, boring mills
are built for the one purj)ose of handling locomotive driving
wheels. Special planers are designed to use in making the
frames of the locomotives. In fact, every part of the engine
is made on a specially designed machine. Jigs and other
auxiliary devices are built which reduce the work of finish-
ing the parts to a mere mechanical routine, and to a very
great extent eliminate the possibility of error.

In erecting the engines, economies can be introduced by
training men to do certain parts and keeping them at a few
tasks.

When things are done on a large scale, specialized plants
can be erected for the sole purpose of making one product.
Every little feature in the process can be stiidied minutely^

BUSINESS SPECIALIZATION 79

and economies wliich ■would be' insignificant on one or two
become very valuable savings on one hundred or more.

One of the greatest money-saving devices known tc the
modern manager is the interchangeable part. The inter-
changeable part is the device that makes possible the spe-
cialized plant, and the savings that have been noted above.
With it, management becomes a question not of detemiining
the best method of handling each new contract, but the best
method of doing each little detail. The introduction of the
interchangeable part has made it possible for American man-
ufacturers to sell locomotives in Europe and far-off China.
It is the reason why thousands of people within our own
borders carry the dollar watch.

Specialization has, nevertheless, its limitations. A man-
ufacturer will do well to investigate carefully the extent to
which he confines his energies to the turning out of a single
article. One can invest a large amount of capital in a plant
which will reduce the output cost many per cent, but if the
plant is specialized to such a degree that it can manufacture
only one product, the investor may lose every cent he puts into
the concern by the introduction of a new commodity that
may capture his market. Thousands of dollars were lost by
•bicycle manufacturers when the bicycle craze died down.

A good rule to follow in plant specialization is to special-
ize to the limit in plants which manufacture necessaries, or
partly finished products whose demand is not affected by any
great improvements, things like flour, sugar, steel rails, steel
j)lates, and articles of a similar nature. In goods liable to
be imj)roved and changed, the specialization of the equipment
may be carried with safety to the point where an improve-
ment or change in the product will not render useless the
appliances of the establishment. One may, for example,
safely specialize a loom to the point where it will make goods
of a certain width and quality, but it would not be safe for
the managers to install equipment which could turn out only

pyU 80 THE PRINCIPLES OF INDUSTRUL MANAGEMENT

cloth of a single pattern or coloring. It would even be safer
for the loom to have some range of variation in width and
quality.

If a product is of an ephemeral nature, specialization
should not be carried past the point where the old machinery-
can be adapted to the manufacture of new things. Toy fac-
tories are never safe in investing large sums of money in
machinery so specialized that it can turn out only one kind
of toy.

In a word, there is a limit to specialization, and the
nature of the goods should determine the danger point for
the manufacturer.

PART TWO
THE EQUIPMENT OF THE PLANT

CHAPTER Vn
CONTINUOUS INDUSTRIES. SYNTHETICAL

After the questions of location, integration, and special-
ization have been settled for any particular business, there
arise the more technical problems affecting the successful
activity of the concern. How shall we build the plant so
that it will make integration and specialization possible?
Can the plant be run in any kind of a building? The answer
is emphatically, No. Even if a business has been placed
in its most suitable environment, it cannot carry out the
plans of integration and specialization unless it is properly
housed. Neither can good management be possible un-
less the building is properly adapted to the work and the
workers.

Every one has noticed that plants for different industries
vary greatly in their structures and layouts. Every industry
can be carried on best in a structure adapted to its peculiari-
ties ; and viewing industries in a broad way, it will be seen
that there are two factors that play exceedingly important
parts in determining the nature of the structure which will
house the plant, viz. :

1. The type of manufacturing industry.

2. The nature of the goods handled.

From the standpoint of the industry one may have two
kinds ot manufacturing:

1. Continuous.

2. Assembling.

A continuous industry is one in which the product is aU
received at one place and the operations to change the raw

84 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

material intxD finished goods are performed in a continuous
manner on the entire mass of material. The raw materials
go into one end of the plant and pass through various ma-
chines and processes without halting at any stage for other
finished parts to be brought to them. ^Vhen such articles
thus manufactured are finished, they are completed as a
whole, and not in sections that must be put together.
There are two classes of continuous industries :

(a) Ths synthetical.

(b) The analytical.

In chemistry the word synthesis is used to designate the
process of making substances by bringing together various
ingredients. In our food and clothes we consume things
which have gone through synthetical processes. A bowl of
soup and a piece of bread are results of synthesis, as are also
stockings and steel rails.

A subdivision of the synthetical class of industries may
indicate whether the industry produces incidental by-products
or not. A very important influence is exercised on the lay-
out of plants if it must handle by-products in the course of
its manufacturing. The non-by-product industries are an
exceedingly important group in the United States. In 1905,
the textiles alone contributed nearly $2,150,000,000 to the
wealth of the country. In addition, the tobacco, clay, paper,
and printing and other industries, all non-by-product in
type, added another $2,000,000,000 to this sum. In brief,
more than one-quarter of our consumable wealth was made
up of products coming from factories of this nature.^

Since the textile industries are the most important class
of this non-by-product group, their plants are instructive.
Into such plants are brought raw materials that are worked
upon during the entire time of manufacturing.

^ Cf . Census Bulletin, No. 57, Census of Manufactures, 1905,
p. 25.

CONTINUOUS INDUSTRIES, SYNTHETICAL 85

Any single textile industry may be regarded as a unit
industry in the sense that the entire plant is devoted to the
production of one thing only — the working up of certain
fibers. This does not mean, however, that there is no wast-
ing of the raw materials as they go through the various man-
ufacturing steps. In every textile plant the cleaning and
handling of the material causes some loss in every machine.
In cotton manufacturing, the subject of the utilization of
cotton-mill waste is becoming one of increasing importance. ^

Figure 7 shows the steps through which cotton passes
to be made into its different finished products. While the
material is passing through the various machines, waste
occurs in dropping from the opener and scutch machines,
the brush-strips from the cylinders and doffer cards, the
card-room sweepings, and comber waste; the bobbin waste,
from fly frames and spinning machines, the hard ends
from cop bobbins ; and there is also the oily waste. The
quantity wasted varies with the conditions and the character
of the raw cotton, the effectiveness of the machinery, the
ability of the operator, and the character of the products
manufactured. The aggregate average of this loss amounts
to about 8 per cent of the raw cotton worked. It has been
estimated that for the entire United States the miU waste
would total to the figures of 175,000,000 pounds, about
87,500 short tons.^

These figures are impressive. To rework all this waste in
the United States would keep 1,000,000 spindles employed
52 weeks in a year.^ Great as it is in the aggregate, how-
ever, few mills find it profitable to rework their waste ma-
terial, the reason being that the waste of each machine is
different, and requires unlike treatment, if not different ma-
chinery, to make it a salable product. Waste spinning is an

' Census Bulletin, No. 97, p. 35*
Hbid, 8 Ibid.

86 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

industry by itself, and requires as much skill in all of its
branches as does the manufacturing of a higher grade of
goods. As a consequence, the textile manufacturer finds it

IL-^v]|L_ „. _^

ItrdU r-

AlA

-c — 1 ..o^. hH w— ■*- .^^ -H "'- h^

« .'.'

— : : i — 1 « 1 II 1 > ■

_ .,...„.. _*_ ._ ^ ».„ J

,..»,^.™o-.

/ \ ,.._^...^^^<^.,......^..„ ___ : ■ ■)

- —

-- ~, J

From Census Bulletin No. 90, p. 27.

Fig. 7. — Diagram of Cotton Manufacture.

more profitable to sell his waste product for what it will
bring, and to confine himself to the production of one com-
modity or claas of products.

CONTINUOUS INDUSIHIES, SYNTHETICAL 87

In order to understand the requirements of an ideal tex-
tile plant it is necessary first of all to know the steps in the
manufacturing process. The working up of cotton offers an
excellent illustration of a textile industry. The diagram
(Fig. 7) on page 86 shows the steps in the manufacture of
cotton goods from the bound bale to the cloth. ^

The machines carry the fiber through twelve main steps.

1. Loosening Out the Fibers So That They May Be
Cleaned. — This is done by the bale-opener or bale-breaker
and the mixing machines. The cotton, in order to be made
suitable for transportation, has been tightly compressed, and
as a consequence, it is very closely matted and quite lumpy
when it comes out of the bale. In order to make it fit to
enter the cleaning and carding machines, it is put through
the mixers and openers where the lumps are teased out and
the cotton itself is made into the form of a broad, loose sheet
of indefinite length, which can readily enter the machine
used in the next step.

2. Cleaning. — The cleaning of the fiber is usually done
by air blast in scutchers, but the fiber is as yet in a rather
crisscross, loosely matted condition, and in that state is un-
Buited to the making of thread. In order to fit it for tha
threads, the fibers must go through the next process.

3. Paralleling the Fibers. — The main work of paralleling
is done in the carding and drawing machines. Some clean-
ing, of course, goes on in the carding machine, but it starts
the step of paralleling the fibers, which is continued by the
drawing frame. After the fibers are made parallel, they
come off the drawing machine in the form of a very loose
sliver, which could hardly be used for spinning, so it must
pass on for some further operations.

4. Attenuating the Slivers or Strands. — The strands are
attenuated on the various slubbing frames or roving devices.
» II ^

^ Ceiisus Bulletin^ No. 90, p. 27.

88 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

It is in these stages of the process that there arises a differ ■
ence in the work put upon the different grades of product.
Very fine goods go through a very great number of machines,
while the coarser grades pass through but one or two. ^V^len
the strands have been attenuated and slightly twisted in or-
der to prevent matting, before they are spun, they pass on to
the fifth step.

5. Spinning. — Spinning is the process of making the
loose strand into a compactly spun thread, and is done by
twisting the strands a great niunber of times. There are two
kinds of spinning machines, the mule spiimer and the ring
spinner. The former attenuates while it is spinning, and is
used on high-grade products. The ring spinner is used on
inferior grades of yarns, and does not attenuate so evenly as
does the mule.

6. DouUing and Winding. — From the spinning machines
are sent forth single strands of yarn. To make a strong and
serviceable thread, two or more of these single strands are
twisted together on various twining and doubling machines.
These machines likewise wind it on different kinds of spools,
so that the yarn may be used for different purposes, as knit-
ting and the like.

7. Reeling. — If the yarn is to be dyed or is to have any
further preparation before it is woven, it is made up into
skeins on the reeling machine ; and if it is to be sent out to
be dyed, or is to be sold as yam, it is made up into bundles
to facilitate transportation.

8. Dyeing. — In this step the yarn is given its color.
After it is colored and dried it is then ready for the final
steps of cloth-making.

9. Firn Winding. — In this step the dyed yarn is wound
in a form so that it can be put into a shuttle, which will
be easy to use in the loom to make the cross threads of the
cloth.

10. Warjping.—T)oLQ preparing of the longitudinal threads

CONTINUOUS INDUSTRIES, SYNTHETICAL 89

of the cloth in such a manner that they can be put into the
loom.

11. Weaving. — The interlacing of the shuttle or filling
threads with the warp threads to make the cloth.

12. Finishmg. — In the finishing process the woven cloth
is cleaned, starched, and treated in various ways to fit it for
its particular market.

The diagram shows how direct the process of manufacture
is. The building, therefore, best adapted to carrying on the
cotton industry is one in which the machinery is arranged in
a direct line from the bale breaker to the finishing room.

There are two possible ways of building a plant so that
this end can be accomplished. It can be built over a great
stretch of territory, with the receiving department at one end
and the shipping department at the other, and the goods may
pass in a generally horizontal line through the plant. Another
form of plant is one in which the floor space is limited to
within comparatively narrow boiuids, but the structure is
made high, so that the goods will pass in a more or less ver-
tical direction. The diagrams in Fig. 8 show examples of
both types of plant.

The textile industry is one in which the labor problem
and proximity to a large consuming market are very impor-
tant. This makes it desirable to locate the plant within the
vicinity of a large population, but where land values are
bound to be high. As a consequence, textile establishments
are usually built on the vertical plan in order to bring their
fixed charges in taxes, rentals, etc., down to as low a level as
their location permits. On accoimt of the weight of the ma-
terial handled and the comparative lightness of the machin-
ery, there is no engineering difficulty cormected with the
building of the structure, and no great expense is involved
in elevating the goods. The cost of handling the goods is so
small compared with the savings due to the high structure
that textile plants have long since been made tall structures.

90 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

There are, however, some disadvantages in a high build-
ing, especially if it be in a crowded city. It is very apt to

R_E^

(LE.

-i-^

1 V — >_.A_j / e

( — r'" t — ^

;:. ^ j ^ tv ^

X-

GnovND VLfiNS Showing- Methods c/ SeND/Nd Goods Thvovsh pj./tf^T'S
g/ Ou£ SroTfy

■'^•.

-^'

1 '*' —

\.v_

>' '

a_8.

t.±.

JVa.

H-4-

t p a »•' /I

A'-

'"'->■ «« , ^ V

i .- ^

« ;

-%^ LeaeND

'.U.' 'Receiving

B - Eho of T'nocejJ
'•Pi = BJsertSLihjo.

■jf J

Elevations Showing Methods o/SeNoiNff Goods Th-roV(;h VifiNy^

Fig. 8.

be so. located as to have some difficulty in securing all the
light desirable for the carrying on of the processes within

CONTINUOUS INDUSTRIES, SYNTHETICAL 91

ihe plant. Until the spinning of the fibers begins, compara-
tively poorly lighted rooms can be used; but when the spin-
ning and winding steps commence, a well-lighted room is re-
quired. In warping and weaving it is even more necessary.
On account of the lighting problem, textile plants have fre-
quently been compelled to vary the sequence of the operations
in such a way as to put the most delicate operations in the
parts of the building where they can get the maximum
amount of light.

The textile industries afford an example of the continuous
industries of the non-by-product type, and the characteristics
of the layout and structure of those plants can be applied
equally well to industries of a similar character. These char-
acteristics are, in brief:

1. The plants may be built either high or Tow, without
necessarily affecting the continuity of the process. Hence
they may be built in congested districts without incurring
rental and taxes unduly high or other overhead expenses
which would become oppressive.

2. They should be well lighted and ventilated, and must
use large window space.

3. The wash-rooms and lavatories should be placed in
positions convenient and yet not obstructive.

The most important industry of the by-product type is
the iron and steel group. The production of this one group
amounted in 1905 to nearly $2, 180, 000, 000. ^ It affords from
its importance and natural characteristics the best example
of the continuous synthetic industry of the by-product type.
In a previous chapter, it was shown how completely the steel
industry is integrated. This integration has been carried so
far that nearly every plant is a complete unit in the sense
that it starts out with the raw material and ends with the
finished product.

^ Census Bulletin, No. 57, p. 25,

02 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

Three main ingredients enter into the production of steel,
iron ore, coke, and limestone. The iron ore is a compound
consisting of one or several oxides of iron mixed with a con-
siderable proportion of other materials, known under the gen-
eral name of gangue. The coke has the quality of extracting
the oxygen contents from the ore, and leaving behind the
iron in a metallic state, but intimately mixed with the molten
gangue. Limestone has the quality of dissolving this non-
metallic content, and separating it from the molten metal.
It sometimes happens that the iron ore will have a greater or
less percentage of sulphur or phosphorus associated with it
in some form or other. If it contains the former, the ore
must be treated to a roasting process, to burn out the delete-
rious content before it can be fit for the blast furnace. Phos-
phoric iron receives its treatment farther along in the steel
furnace itself. The diagram on page 93 gives some idea of the
steps in the preparation of iron and steel products (Fig. 9) .

A few years ago nearly all coke was prepared in the vicin-
ity of the coal mines, in bee-hive ovens, which did not yield
any by-products. This was following out the well-known
principle that all unnecessary ingredients of the raw material
should be removed at the source of supply in order to save
freight rates. Within the past few years, however, it has
been found that the products so carelessly lost by the bee-hive
oven are by no means worthless.

Probably people were thoughtless of the by-products in
coal because of the location of the iron and steel industries.
Pittsburg was in the center of the richest natural gas region
in the world. Heat and power were given with such a free
hand by nature that the iron masters could not afford to trou-
ble themselves about saving the riches in coal. Since the
opening of the Pittsburg district, great changes have taken
place in the steel industry. It has moved away from the re-
gions of natural gas, and the gas itself has largely given out.
Heat can no longer be had for the mere tapping of the ground.

94 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

but must be secured by a more costly method. Human in-
genuity has been equal to the occasion ; the bright luminous
flame that burst from the top of the old bee-hive oven waa a
beacon inviting the scientist to explore an unknown world of
wealth. The gases which served to make useless flames are
now carefully husbanded and burnt where they will create
wealth for the owners. Coke is now made on the grounds of
the steel plant and in by-product ovens.

Chemistry has revealed the fact that coal can be made to
produce three valuable by-products aside from coke, namely,
gas, anmaonia, and tar. The latest type of the by-product
coke oven saves all three of those products. The gas is col-
lected and purified and sent to the various parts of the plant
for heating and power purposes. The tar is merely collected
and sold. In America the greater percentage of the tar is
purchased by people who have been instrumental in installing
the by-product ovens, and is worked up by them into various
substances, as, for example, aniline, creosote, and pitch, each
one of those products being a representative of the three main
divisions, into which the tar can be broken, viz. : light oils,
heavy oils, and pitch. The ammonia which is driven off
from the coal appears largely in the form of a sulphate and,
after being purified, is largely used as a fertilizer. As a
result apparatus to purify the gas, collect the tar, and treat
the ammonia is connected with the coking department of
the steel plant.

Limestone does not require any preliminary treatment
aside from being broken and screened into suitable size for
the furnace. It is, however, the basis of the slag, which
comes from the blast furnace and which yields some further
by-products.

The manufacturing of steel goods from the raw materials
is a continuous process ; but a steel plant, unlike a textile
establishment, is not handling light goods. The units han-
dled weigh tons instead of pounds. The raw material haa to

CONTINUOUS INDUSTRIES, SYNTHETICAL 95

be accumulated in great masses in order to keep sufficient
stock for all seasons of the year. Daring the winter months,
owing to the freezing of the lakes, ore transportation is largely-
suspended. Moreover, the forming processes of steel require
many passages through fiery furnaces, making it impossible
to use anything but the most stable and heat-resisting build-
ing material.

The first requisite demanded by the nature of the material
and the character of the process is sufficient ground space to
make provision for heavy foundations and ample room for
machinery, furnaces, soaking pits, and all the subsidiary
plants that are necessary parts of a plant.

The new plant of the United States Steel Corporation at
Gary, Indiana, shows what present requirements are. The
dimensions indicated on the map (Fig. 10) give one some
idea of the gigantic proportions of its grounds. The engi-
neers of this plant introduced every possible improvement
that experience has demonstrated profitable. The ore is
brought in by lake vessels and unloaded by machinery to the
great stock piles and the charging bins. Eailroad connec-
tions enable the coke and limestone to be unloaded from the
cars into the respective receptacles without any unnecessary
handling.

The blast furnaces are the apparatus which manufactures
the iron ore into pig-iron. They are charged from the top
by means of skip hoists, the buckets of which are filled by
means of gravity with ore, limestone, and coke, from the
bins above mentioned.

The blast furnace derives its name from the fact that it
receives its air for fuel combustion under heavy pressure from -
powerful engines. This air is admitted into the bottom of
the furnace at certain openings called tuyeres. In order to
make it more efficient as an ironmaker the blast is highly
heated by being passed through special devices called stoves,
which are frequently as high aa the furnace itself. The stoves

96 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

are usually arranged in batteries of four to each furnace.
Wliile three of them are being heated by the waste gases from

Adapted from blue prints furnished by courtesy of U. S. Steel Corporation.

Fig. 10.— Plan of the Steel Plant at Gary, Indiana.

the furnace, the fourth stove is giving up its heat to the
entering blaat.

CONTINUOUS INDUSTRIES, SYNTHETICAL 97

Three products come from the blast furnace:

1. Pig-iron, which goes onward for its final treatment,
eventually becoming the steel rail or some other finished ma-
terial. This is tapped out of the lower part of the furnace
from time to time as the process goes on.

2. Gas, which is given off from the top of the furnace and
is carried away by the downcomer. This gas contains suffi-
cient combustible material in it to make it a very valuable
by-product, and is now extensively used in heating the stoves
of the furnace, and for power purposes.

3. Slag, which at one time was a source of expense to
carry away, but is now made into cement.

The pig-iron, after it is tapped from the furnace, is carried
onward in a molten state by great ladles to large mixing de-
vices, where it is blended with the charges from other blast
furnaces, and made sufficiently homogeneous to warrant its
being taken to the steel furnaces. The steel furnaces may be
one of two types — the open-hearth steel furnace which is now
being more commonly used throughout the country because
of the superior quality of the steel it produces, or the Besse-
mer converter, which was at one time mainly used in steel
manufacture on account of the rapidity with which it convert-
ed pig-iron into steel. In either case the location of the plant,
which does the changing of the pig-iron into steel, should
be in a direct industrial line from the blast furnaces and mix-
ing box, so that there will be no loss of time or waste of heat.

"Intra-works transportation plays a mighty part in this thrifty
hurry. The switch track, indeed, is the vital factor in Gary's
scheme. Other steel plants may adopt its gas engines, copy its
enormous open-hearth units, duplicate its surpassing rail mill.
But they would have to rebuild from the bare ground up to attain
the economies secured at Gary by the arrangement of furnaces and
mills. The placing of these was dictated by the speed a laboring
locomotive can make on a curving switch track.

To relieve the locomotive and achieve speed, the ri^ht angle
was abolished in locating the various units. Instead of setting the

08 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

blast furnaces parallel or at right angles to the tracks serving
them, they were placed at an angle of 22 degrees, allowing a 200-
foot radius for the entering switch. A train of 40-ton ladle cars
can negotiate that swiftly, easily with little outlay of power and
no danger of accident. Reversing on the main track, they will
rush away to the open hearths on long, easy curves of 800 feet
radius. What goes in at the near end of each unit goes out at the
other, one step nearer finished product. There is no 'backing up,'
except of empty ladles or cars.

From the casting floor of the open hearths, the ingots go to the
mold-stripping houses, thence to the soaking pits and the ordeal of
the rolls. Between blast furnaces and open hearths the angle to
be overcome is only 57 degrees ; between the latter and the soak-
ing pits about 70 degrees. The shortest curve in the 175 miles of
track, which will serve the mills, has a radius of 200 feet ; nearly
all are upwards of 400 feet. The elevated approaches to the fur-
naces and mills were planned with the same canny regard for speed
where speed is vital ; elsewhere they are a compromise between
economy of space and of power. The company's locomotives will
do the switching — the cost will depend on how fast they can move
a load, how little coal and time they consume. Continuous gravity
tracks at the shipping platforms allow the shifting of loaded^cars
without engines.

Analysis of the work's transportation can go no further than to
say that.it embodies the most advanced railway practice. Switch
and service tracks, except those at the blast furnaces, are contin-
uous ; blockades are impossible, both ends being accessible and the
forward movement of cars is uninterrupted. The same principle
obtains in the 'Kirk' classification and storage yards, and in the
locomotive house, through which tracks and pits run at an angle,
abolishing the turn table. These individual savings, multiplied
daily a thousand times, make tremendous economies." ^

In the steel furnace, the molten pig-iron is brought into
contact with air, and in this way the excess carbon in the
iron is removed, to give the metal the properties of mild
steel. When that stage is reached, the blast is turned off and
the reducing process ceases. The furnace is then emptied of
its steel contents into a great ladle, which is carried over to

^System^ January, 1909, pp. 10 and 11.

CONTINUOUS INDUSTRIES, SYNTHETICAL 99

the molds. The molds are placed on trucks, set on an indus-
trial railway, and after the steel is emptied from the ladle
into these molds, it goes back for another ladleful, while the
locomotive hauls away the steel-filled molds whose contents
are soon to harden into ingots.

By the time the ingots arrive at the steel plant, they are
ready to be taken from their molds. This removal is done
by a device called the stripper, which automatically removes
the casing and sets it on another car, by which it is returned,
to be used in molding another lot of metal. The ingots,
highly heated, remain standing on the trucks ready to
be hauled to the soaking pits, into which they are placed in
order to be kept hot until they are ready for the rolls. The
waiting period is not long; some unseen power uncovers the
top of one of the pits, a pair of giant tongs lifts the mass of
dripping steel from the flaming cavity, and lightly waltzes
it through the air to a little truck into which it is gently
placed. The truck, as soon as loaded, automatically carries
the great ingot on to the roll tables, which pass the mass of
metal to and fro between two sets of rolls, one pair of which
is placed horizontally and the other vertically. By a few
passes the sizzling metal is reduced from ingot dimensions to
bloom size. From these rolls, the bloom is taken automati-
cally by rolling tables and carrying devices either to another
soaking pit, where it is reheated before entering the rail
mills, or it goes directly from the first pair of rolls to the rail
miU.

The rail mill consists of three steel cylinders set horizon-
tally one upon the other. The bloom is put between the two
lower rolls and is drawn through. When it gets through, the
roll table on the other side of the rapidly revolving shaping
cylinders tips upward and carries with it the partly formed
rail, and then automatically pushes the latter into the upper
set of rolls, which now draw it back to the other side, and
the other table tips up to receive the more nearly formed rail.

100 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

This process is repeated until seven or more passes are made,
and the steel bloom becomes a great long steel rail.

After it makes its last pass it is carried on to the saws
where the ends are trimmed off, and then the revolving gang
saws, at a single sweep, cut several rails, thirty to thirty-
three feet long from the stiU red-hot steel ribbon.

After that, automatic devices carry the rails to the cooling
tables, where they remain until they attain the atmospheric
temperature. WTien cooled they are ready to receive the fish-
plate holes. These are put in by drilling machines. Three
or more individual drills are groujDed with a few inches in-
tervening between centers, and then the two gangs of drills
are distanced from each other by the length of the rail. The
rail is placed in position, and the mere pulling of a lever
starts all the drills in both gangs simultaneously, and the
holes are cut in a few minutes, making the rail ready for
shipment. Here, again, the ever-present carrying devices are
ready to do their work. As soon as the holes are cut, a trav-
eling chain slides the rail gently into a freight car, which is
waiting to receive it to carry it to the consumer.

CHAPTER VIII

CONTINUOUS INDUSTRIES, ANALYTICAL

The preceding chapter considered the kinds of plants
suitable for carrying on synthetical processes. This chapter
will discuss plant structures for another large grouj) of con-
tinuous industries, which may be designated Analytical.

An analyst is one who separates a body of matter into its
constituent parts, or breaks it down into its original ele-
ments. The process is not confined to the treatment of physi-
cal bodies. A judge is called a keen analyst when he takes a
mass of data presented by contending lawyers, and separates
it in such a manner as to reveal the true significance of the
evidence. This is as truly an analytical process as is the fil-
tration of water. The judge separates the true from the false
in evidence, just as the filter extracts the impurities from the
wat^r.

Non-by-product and by-product industries may be in
either the analytical group or in the synthetical class. The
non-by-product group of analytical industries in 1905 con-
tributed more than $2,500,000,000 to the wealth of the
country, mainly in the form of food products (not including
meat packing), liquors and beverages, and lumber products.^
Liquors and beverages are properly placed in this group of
industries because they are in the main extractive industries.

In the industries discussed in the preceding chapter, the
materials handled in the process of manufacture were of such
a nature that there had to be a considerable expenditure of
time and labor or power in conveying the partly finished

1 C^risus Bulletin, No. 57, pp. 25 an4 37^

102 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

goods from one machine or step in the process to another.
In a textile establishment trucks and elevators are very ex-
tensively used, while in a steel mill the conveying machinery
is unique for its elaborateness.

In the analytical group of industries, the larger number
can utilize exceedingly cheap means to convey materials from
step to step in the manufacturing process. Two conditions
conspire to make this possible:

1. In many of those industries gravity can be extensively
used in conveyance.

2. The processes are of such a nature that the goods, as a
rule, are handled in bulk or in continuous, unbroken streams
rather than in individual units.

Matter may be gaseous, liquid, or solid. The handling
of the solid is the most difficult and expensive; but if the
solids consist of very finely divided particles, the task is sim-
plified. Such goods may, in fact, be handled as easily aa
liquids.

Liquids are very easily handled in bulk. They can be
concentrated at a single point, as at the bottom of a building,
and then, by means of pumps, be forced through pipes to the
top of the structure. From this elevated position they can
be passed by gravity through the various steps of the process
from the beginning all the way to the shipping-room.

Sugar-refining affords an excellent illustration of an in-
dustry of the non-by-product type which handles solids and
liquids. Raw sugar comes to the United States in large
quantities from abroad. The large refineries are usually lo-
cated at some seaport where it is possible to unload the sugar
directly from the vessel into the storage house.

The raw sugar is carried in the hold of the vessels in bags
of various descriptions, and is hoisted out by a steam wind-
lass in lots of several hundred pounds at a time. From
thence it is weighed in the presence of government inspectors
who determine the duty charges. After it is weighed, it m

CONTINUOUS INDUSTRIES, ANALYTICAL 103

carried to the storage house by means of rapidly moving
traveling cranes. These cranes stack the sugar in immense
piles away from the weather, where it is kept until ready for
use.

In order to refine the raw sugar it is dissolved in crude
molasses, which is then heated to the melting point. This
is usually done on the first floor in close proximity to the
storage sheds. (See Figs. 11 and 12.) From thence it is
pumped to the top of the building and treated in the defeca-
tor with some reagents, which coagulate the various impuri-
ties and neutralize any vegetable acids in the sugar solution.
When the coagulation is complete, the solution is run to the
floor below, where it passes through coarse canvas bags, which
strain out foreign substances.

The solution, although now freed from the grosser impuri-
ties, would still give a yield of rather unappetizing appear-
ance if not further purified before crystallization. In order
to remove all extraneous matter it passes another story down-
ward through large bone black filters, from which it issues a
clear, colorless liquid, occasionally slightly tinged with yel-
low. After it has passed through the bone black filters the
solution is ready for crystallization. The crystallization is
done on the next floor below.

Here are placed large enclosed vessels connected with an
exhaust which reduces the pressure in the vessel to a very
low point. These enclosed vessels are known as vacuum pans
in which the solution is boiled in order to crystallize the
sugar from it. The task of boiling the sugar until it reaches
the proper point for crystallization is one that requires care
and experience on the part of the operator, and as a rule he
is one of the best paid men in the plant.

After the solution has been boiled until it has reached the
proper condition, it is run into cooling and mixing tanks to
crystallize. These tanks are situated on the floor below the
vacuum pans and contain a semi-liquid paste of syrup and

By courtesy of Geo. M. Newhall Engineering Co. Ltd., Phlla., Pa.

Fig. 11. — Sugar Refinery Scheme,

Sugar Breaker.

18.

Air Drier Feed.

33.

Moist White Sugar.

Elevator.

19.

Air Drier.

34.

Sugar Packer.

Raw Sugar.

20.

Air Heater.

35.

Water Cooler for Char,

Raw Sugar Heater.

21.

Granulator.

36.

Char Duster.

Raw Sugar Mixer.

22.

Screen.

37.

Conveyor.

Centrifugals.

23.

Powdered Sugar Mill.

38.

Hot Water and Liqx

Machined Sugar.

24.

Conveyor.

Tanks.

Sugar Melting Pan.

25.

Barrel Packers.

39.

Char.

Blow-Up.

26.

Bag Packers.

40.

Char Drier.

10.

Defecator.

27.

Scales.

41.

Char Kiln.

11.

Bag Filter.

28.

Tank for Refined Mo-

42.

Char Cooler.

12.

Char Filter.

lasses.

43.

Char Conveyor.

13.

Vacuum Pan.

29.

Conveyor.

44.

Char Elevator.

14.

Sugar Wagon.

30.

Cube Sugar Machine.

45.

Water Heater.

15.

Mixer.

31.

Triple Effect Evapora-

46.

Bag Wash Tank.

16.

CentrifugaL

tor.

47.

Pump.

17.

Sugar.

32.

Mixer and Cooler.

48.

Raw Sugar.

CONTINUOUS INDUSTRIES, ANALYTICAL 105

granulated sugar. To make the complete separation of the
crystals from the syrup the pasty mass is dropped into cen-
trifugal machines located on another floor beneath. The
centrifugal machines revolve at a high speed, and fling the
liquid material through their porous sides, leaving behind
the granulated sugar. At this point in the process, any yel-
lowness which may tinge the sugar is removed by the slight
addition of some ultramarine to the sugar as it is being
whizzed in the machine.

From ^the centrifugal machines the sugar is passed to
another floor, where it is placed in large drying and granu-
lating cylinders heated by hot air. After it is dried and
granulated it is run into bins, and from them, by gravity, into
barrels and other containers in which it is sold to the con-
sumer. (See Figs. 11 and 12.)

Gravity is likewise used in cleaning the apparatus of the
refinery. The bone black or char filters become clogged with
impurities, so that it is necessary to clean them out at fre-
quent intervals. This is accomplished in a very ingenious
manner. The char contents of the clogged filter are dropped
through a series of heated cylinders, which first dry the ma-
terial and then heat the char to the point of incandescence, so
that the impurities in the char become charred themselves,
and as a consequence the impurities actually become the
means of purifying succeeding lots of sugar. (See Fig. 11.)

It is evident that a sugar refinery must be a very high
building if it is to take advantage of the gravity method of
conveyance. This is usually the case ; and, inasmuch as there
are few steps in the process which require a great amount of
light and observation on the part of the worker, one will
usually find that sugar refineries are tall, somber-looking
buildings. They must all have great storage-rooms in order
to contain the raw sugar and also to hold their finished prod-
ucts, because the goods come from afar, and the manu-
facturer must keep oa hand a great quantity of goods in

CONTINUOUS INDUSTRIES, ANALYTICAL 107

order to keep his plant running uniformly throughout the
year.

The diagrams 11 and 12 show the layout and elevation of
one of the largest sugar refineries in the United States. In
connection with a great many refineries there are very fre-
quently barrel factories and wooden box factories which man-
ufacture the cases for the finished sugar.

The shipping room of the sugar refinery should be so
placed that the finished sugar will come into the department
with the least possible trucking cost. The room should also
be so placed that the goods can be put into wagons or cars
without any unnecessary handling. The diagram shows how
closely the refinery has held to this ideal. The packing,
storage, and shipping departments are located right on the
corner of the public street and railroad, and goods can be
put into the freight car with even less handling than it takes
to load the wagons which distribute the products to the local
grocers.

Another well-known industry of the analytical type which
handles solids exclusively and uses the gravity means of con-
veyance is flour milling. The rapidity with which flour is
made and the cheapness with which it is handled is a never-
ending source of interest to the student of industrial manage-
ment. One can go through a mill that manufactures thou-
sands of barrels a day and find some few dozen men supplying
all the necessary labor for the vast concern. The steps in
flour-making are as follows :

1. Cleaning. — Here the grain is not only separated into
good and bad lots, but has all foreign matter from dust to
twigs and nails taken out of it.

2. Grinding. — At this stage the different qualities of
flour are obtained by separating out of the grain its various
envelopes of nutritive matter and grinding them between
different series of rolls.

8. Screening or Bolting- — In this step the various gradeg

108 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

and sizes are separated after they have passed through the
rolls.

4. Purifying. — The purifier extracts from the finely
ground grain the light flaky celhJose technically known as
"bees' wing." This bees' wing has become so intimately
mixed with the flour that it cannot be taken out by the
screens. The work is done by means of a gentle air blast,
which is strong enough to remove the bees' wing but not the
flour particles. This leaves the flour purified of all foreign
matter.

6. Packing. — Here the flour is weighed into bags and
barrels and sealed for shipment.

6. Storage and Sliipinng.

In order to take advantage of the gravity method, convey-
ing buckets carry the grain to the top of a high, almost win-
dowless structure, where it is cleaned of its impurities in
prei)aration for the grinding. Several grinding processes
take place, and after each grinding the grain is bolted. On
account of these many grinding and bolting steps, it is un-
economical to build a mill so high that gravity will do all
the conveying work from the beginning to the end of the pro-
cess. Considerable saving in power and space is obtained by
keeping tlie cleaning, gi-inding, screening, and purifying ap-
paratus on different floors. This makes necessary some re-
conveying of the partly ground grain to upper floors, but the
general line of passage is not broken. One great stream of
grain starts from the top of the building, and after a few
eddying currents on the downward flow, finally emerges from
the last machine as white flour ready for the baker.

The by-product industries of the analytical type con-
tribute by the meat packing and chemical industries, in-
sluding oil refining, about $2,000,000,000 annually. ^ The
meat-packing industry alone accounts for $914,000,000 of this

* Censtts BuUetiUt No. 57, pp. 25 and 27.

CONTINUOUS INDUSTRIES, ANALYTICAL 109

amount.* It offers one of the best examples of an industry
of this type.

In meat packing, large units are handled. It would be
an exceedingly difficult matter to handle the products of the
packing house as grain is handled. The packing establish-
ments have introduced such remarkable economies into their
business that it is noted the world over for its perfection in
organization; and the buildings have been made to fit the
process in a most remarkable way.

The packing house, as in all industries, one of the im-
portant problems, is the passing of goods from department to
department with the least possible outlay of power. It has
been seen how some other industries solve the problem. The
manager of the packing house does not handle goods that can
be pumped or conveyed by belts and run through machines
in bulk, as is done in cotton spinning or flour manufacturing.
His task is to handle a delicate, but large and unwieldy body.
A miscut will lower the value of the product, perhaps enough
to destroy the profit in that step of the process, and even
cause an absolute loss on the entire carcass.

It has been said that in the packing house everything
about the animal is saved save his dying groan. A person
can apxjreciate the full significance of this statement when he
realizes the refinements of the savings. The first step in the
process of meat packing is to drive the animal to the top
floor of the building, where it is stunned. The succeeding
steps in the j)rocess are as follows :

After the animal is knocked on the head it is dropped
from the stuiming platform to the floor. Here the animal is
shackled and lifted by means of a power pulley to the bleed-
ing rail, where its throat is opened and allowed to bleed for
six minutes. At the end of that time the head is removed
and the carcass allowed to bleed for ten minutes more. By

^Censtis BuUetint Ko. 67| p. 27.

no THK PRINCIPLES OF INDUSTRIAL MANAGEMENT

this time it is ready for further dissection. Formerly it "was
the universal practice to have this dissection carried on with
the animal hung by its hind feet from an elevated rail. The
rail was slightly inclined so that the mere weight of the car-
cass would move it onward.

With this arrangement the workman had to walk wath
the moving animal while he was working upon it. More*
over, the animal, being himg in this way, was somewhat in-
conveniently placed for some of the dressing steps. In order
to place it equally conveniently for all dressing steps, and to
eliminate the walking on the part of the operator, the Armour
Company has installed a moving table, 216 feet in length, on
which the animal is deftly dropped on its back after it is
beheaded. The workmen stand on this moving table, make
their cuts on the animal, and then move back to the new ani-
mal as it comes from the preceding worker. In this way while
they are cutting the animal, they are stationary with respect
to it, yet the animal is going on its onward course.

As each piece is taken from the body it is dropped into a
chute or opening by which it is carried by gravity to the
place where it will receive further treatment. The carcass
itself moves onward. After all the trimming has been done
on the tables it is lifted automatically from the table to over-
head traveling hooks. These hooks are run on troUeys, and
the track is inclined. Here the dressing is continued, and
the animal is washed, cleaned, split, and eventually weighed.
All the time these operations are going on it is gradually
approaching the cooler.

Fig. No. 13 is taken from one of the large packing houses
in Chicago, and shows graphically how well the firm has
kept in mind the adaptation of the building to its purposes.
The entrance for the animal is so placed that by the time its
carcass is prepared no unnecessary traveling is required to
enable it to have cheap shipment either for long distance by
railroad, or for local trade by teams.

CONTINUOUS INDUSTRIES, ANALYTICAL

111

The photograph on the other page (Fig. 14) shows the
tremendous extent of ground covered by one of the large es-

Adrd. STEEET.

r-CJ-

BLEE0JM6 BAIL.

Cdtle Kjoo 6 Minute*

'o^ H«oJ

-CZK

BLCEDiriG (SAIL.

CdlK MiM) I

utr* &mfOP<s 0<*«Mirwf d«()in«.

Tl*»i» Table H«ie« and tnTisiili "--

OeeaStMG AMD SPurTTIHO eAIL.

Hei^ The Car^as« t6 Fwr«iK«i
And Qpllt Down &ock 6oA«.^

CL£ANinG AND COCUING RAIL.

COC
CHIu!

Wholesoe Locol

©pecteR

LINC
EOOM.

OPPEE FLOORS.
Ho<^ Shippin<),

LowEi? Fuooe.

Baef Shipplna

Local ShipTnenTS.

£2/ courtesy of Armour & Co.

Fig. 13.— Plan of a Packing House.

tablishments and the apparently heterogeneous arrangement
of storehouses, power houses, laboratories, stables, and other
J9

112 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

departments.^ The plants do not have the most economical
layouts. The writer, in speaking to a number of the officials
of the various concerns, has been told that there are hundreds
of places where improvements could be made. Any concern
having a clear spot of ground sufficiently large would rebuild
its plant in quite a different way. The present grouping of
buildings has resulted from meeting the needs of the mo-
ment. Idealism had to be sacrificed to present exigencies.
However, the arrangement and grouping of the buildings
with all of their defects indicate several noteworthy fea-
tures : ;

1. The various killing departments have maintained the
theoretical ideals of structm-e of buildings. In the cattle,
sheep, and hog-killing establishments the animal supplies its
own motive power to the plant from the unloading pens, and

' The various departments numbered in Fig. 14 are as follows :
1. Lard and Oil Refinery, Butterine and Oleo Oil. 2. Tin Shop
Lithograph Department. 3. Carpenter Shop. 4. Visitors' En-
trance, Paymaster. 5. Timekeeper, Emergency Hospital. 5a.
Fire Engine House, Watch Patrol. 6. Pepsin Laboratory, Diges-
tive Ferments. 7. Vinegar, Pickled Goods. 8. Smoke House. 9.
Scale Repair. 10. Employment Office. 11. Storage. 12. Print-
ing Department, Labels, Stationery, Advertising. 13. Hog Kill-
ing. 14. Canning Department. 15. Beef Extract, Mince Meat,
Soda Fountain Supplies. 16. Sausage. 17. Meat Curing. 17a.
Pork Cutting Floor. 18. Butter, Egg, and Poultry Freezer. 19.
Power House and Refrigerating Plant, Electrical Department,
Machine Shop, Boiler Rooms. 20. Beef Freezer. 21. Cattle Kill-
ing, Sheep Killing. 22. Wholesale Market. 23. Ham and Bacon
Department. 24. Shipping Department. 25. Bone Novelty De-
partment. 26, 27. Fertilizing Factory. 28. Stables. 29. Wool
House, Sheep Skins, Pelts, etc. A large number of the depart-
ments are not shown on the picture, for instance : Hide Cellars,
Chemical Laboratory, Cooper Shop, Paint Shop, Police Station,
Retail Market, Gas Plant, and Box Factory. The Glue, Gelatin,
Soap, Curled Hair, Sandpaper, Anhydrous Ammonia, and Isinglass
Departments are at Thirty-first and Benson Streets, one mile north
of the Union Stock Yards.

CONTINUOUS INDUSTRIES, ANALYTICAL 113

the buildings into which they run are well arranged to
handle the cattle from the slaughtering to the shipping.

2. The various subsidiary plants, as the canning and
smoked meats departments, that are most dependent upon
these main sections, are situated in close proximity to main
departments.

8. The auxiliary plants which manufacture the acces-
sories necessary to carry on the main business are placed
near the buildings, which use their output ; the can manu-
facturing plant being placed conveniently between the lard,
butterine, and oleo dejDartment and the canning department.

4. The departments which are not in such intimate con-
tact with the more active business and yet which are abso-
lutely dependent upon the main killing departments, are
placed near the various killing departments, but not in any
particular rotative order, as, for example, the pickling and
storage departments.

5. The derivative industries, as, for example, the but-
terine and oleo plants, lard refineries, and the like are put
as near the killing establishments as is possible without
interfering with the other more important subsidiary in-
dustries.

6. The derivative industries, as the fertilizer plants,
W'hich create offensive odors, are placed on the outlying
boundaries of the plant.

7. The power house is put in a central location. The
ideal situation for the power house would be to place it as
near the departments requiring the most steam, namely, the
tanking house, bone house, and oil house, which, according
to Mr. Wilder, are the largest consumers.^

A close inspection of the photograph will show, however,
that in a nimiber of cases there are deviations from the best
practice, as recognized by modern managers. The printing

,>*'The Modem Packing House." by F. W. Wilder, p. 28.

114 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

establishment, for instance, is backed by the house which
manufactures digestive ferments. On its right side, is the
beef extracting and soda fountain supply department, while
on the other is the timekeeper's office and the emergency
hospital. The various pickling and storage houses are scat-
tered all over the plant, some of them quite a distance from
either railroad siding or the plants which give them their
material. Even the shipping department is open to some
criticism. The beef and sheep shipping-room is located at
one place, the hog shipping at another, while the products
from the canning and curing departments must travel some
distance before they reach a shipping platform. (See Nos,
22 and 24, Fig. 14.)

CHAPTER IX
ASSEMBLING INDUSTRIES

Besides those kinds of manufacturing wherein there is a
continuous action upon the entire mass all the time the goods
are being treated, there is the Assembling type. An assem-
bling industry is one wherein the final product is made by
first producing the various ingredients or parts, and then as-
sembling them together. This type of an industry requires
a manufacturing department, men or operators to make
parts, and- another set of producers who join these parts.
Examples of these industries are shoe manufacturing, toy
manufacturing, locomotive making, engine building, ship
building, piano making, and clothing making.

According to the Census reports of 1905 this assembling
class of industries in the United States yielded over $4,000,-
000,000 worth of products.^ Four of the fourteen groups into
which the census report classifies industries, including leather
and its finished products, metal products, vehicles, and ship-
building, had by far the larger part of their production made
by this method. The miscellaneous group of industries, em-
bracing agricultural implements, electrical machinery, and
musical instruments, made a contribution of $350,000,000
to the assembling industries, while the lumber group gave
$170,000,000 worth in furniture. Iron and steel added a
total of nearly $800,000,000 of assembled goods in machinery
products, and the textile group gave over $800,000,000 worth

* Census Bulletin^ No. 57, p. 25.
115

116 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

in men's and women's clothing, fur goods, hats and caps,
millinery, men's furnishings, and corsets.^

These industries divide themselves into two typical
classes, which in a measure correspond to the non-by-product
plant and the by-product plant in the analytical industries,
except that in the by-product plant the material is taken from
the goods, while in the assembling process the subsidiary
plants contribute to the main material. The assembling in-
dustries are here divided into these two groups which are
considered separately :

1. Direct producing industries wherein the goods are re-
ceived, worked upon, and assembled without the intervention
or using of any intermediary steps which do not finally show
in the finished goods. Examples of these are afforded by
shoemaking, toy manufacturing, piano producing, and by
many other industries.

2. Indirect industries wherein vast amounts of money
must be spent in producing forms, patterns, molds, and other
auxiliary supplies before the product can be obtained; as for
example, machine and tool manufacturing, shipbuilding, lo-
comotive making, general machine shops, and electrical sup-
ply plants.

One characteristic of the assembling industries of both
classes is that the goods they produce are made up of a great
number of parts, each one of which must be separately han-
dled and treated, and adjusted to all the other parts of the
completed article. A simple-looking instrument, like a pi-
ano, is made up of several hundred pieces, which must be
carefully adjusted to each other to evolve the perfect instru-
ment. The individual pieces are themselves made up of
parts. The keyboard apparatus consists of a key and ham-
mer. A key is made of about eight pieces. The hammer
has seven pieces. A full piano has fifty-two white keys and

iCf. Census Bulletin^ No. 57, Table 84, pp. 76-93.

ASSEMBLING INDUSTRIES 117

thirty-six black. In addition, there are the strings, pivots,
sounding boards, and a great many other parts which in
themselves are made up of other parts. In order to get beauty
in workmanship and a trustworthy article, all of these things
must be handled with discriminating care and deftness.
Machinery can cut the lumber, it can twist the strings, smooth
the ivoiy, make the felt, it can plane the pieces, but it can-
not assemble them without intelligent guidance.

Another characteristic common to both types of assem-
bling manufacturing is that in these industries, more than in
any others, a very large amount of the work must be done by
human labor. Assembling industry plants, as a rule, have
far more operatives to an establishment of a given size than
does any other group of plants. This is due to the fact that,
as a rule, the assembling plants manufacture direct con-
sumption goods which are designed to give immediate per-
sonal satisfaction to the consumer. It is true that wheat
grinding produces a consumable product in the form of flour,
but the public does not get any immediate satisfaction from
the flour. It must go through the bakery and be assembled
with other ingredients, such as sugar, butter, lard, etc., be-
fore it becomes a consumable product. The manufacturing
of pig-iron makes a consumable product for the foundryman,
but the cast pig-iron in itself would be of little utility imless
it passed through the foundry and machine shop to produce
locomotives which can haul trains, or engines which can
supply power to run looms.

The products of assembling industries are in themselves
objects more or less comj)licated in their construction and
essentially specialized in their nature. They have a great
amount of individuality. They are complex and various in
construction. In many cases it would be unprofitable in the
first place to make machines to do much of the work; because
the machines would have to be altered at frequent intervals
on account of the changes in styles and of the rapid improve-

118 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ments which are constantly being made in the construction
of these direct consumption goods. In the second place,
machines to do the work would have to be so complicated
that long periods of time would be required to evolve and
develop a profitable machine.

The assembling industries, although having a very great
deal of machinery, have machinery of a more or less general
nature to do work of more than one kind or size. These ma-
chines of necessity require operatives who can adapt them to
do new work, and who must guide and direct them while
they are running.

These two characteristics at once bring up exceedingly
important questions :

1. How shall the various manufacturing departments be
arranged with respect to the assembling department so that
there will be a minimum amount of handling of the pieces?

2. How shall the plant be built so that a comparatively
large number of workers will find room and convenient facil-
ities for doing their work?

It has been seen in the two preceding chapters that the
straight-line method of moving material through plants is
the theoretical ideal for cheap production; and it has been
shown how various types of plants have adhered to the ideal
and have adapted their structures accordingly. What is true
of the continuous industries is also true of the assembling
industries. The straight-line method of manufacture is, if
considered from the absolute standpoint, the ideal. The
buildings should be so constructed and the departments so
arranged that there will be no retracing of steps or backward
movement of the parts in their passage through the plant.

Fig. 8 shows how the straight-line ideal may apparently
be varied and yet be rigidly adhered to in plant construction.
The diagram likewise indicates in a similar manner how the
Btraight-line method may be applied to the assembling pro-
cesses, (See Nos. 4, 5, 6, 11, 12, and 13, Fig. 8.) The

ASSEMBLING INDUSTRIES 119

question of providing room for the employees will naturally
modify the geometric line, and the figure shows how the
straight industrial line is maintained in many plants and
yet opportunity is given for the employees to carry on their
work. If it comes to a question of deciding between depart-
ing from the straight industrial line and locating a certain
department or set of machines so that they will be more con-
venient for the employees, it is usually better to depart from
the industrial line rather than make conditions such that the
output of the employees will be limited by external condi-
tions.

Shoemaking is a good example of the direct producing
industry. Factory shoes are usually made in two dozen lots,
each company confining itself to a more or less limited num-
ber of styles and values of shoes. In some cases, the styles
made by a concern will be a dozen or even less ; and then, on
the other hand, they may extend into the scores.

To produce a shoe requires :

1. The Cutting of the Material for Uppers. — The leather
forming the upper portion of the shoe is cut to certain pat-
terns which vaiy with the style of the shoe. The linings are
likewise cut from special cloth.

2. Skiving or Leveling. — The edges of the leather are
then put through a skiving machine, which levels them off
so that they may be neatly turned, thus presenting a finished
edge on all open parts.

3. Turning. — The skived leather is then passed over to a
machine which apjDlies cement to the inside of the beveled
edge and deftly turns the leather over and gives it its fin-
ished appearance.

4. Ornamenting. — The small perforations seen in the tips
and other parts, which are put in for ornamental purposes,
are dyed in the leather at this stage by means of a Power Tip
Press.

5. Sewing, — The different parts of the upper are sewn to-

120 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

gether on special sewing machines; and the cloth lining is
likewise stitched to the leather.

6. Eyeletting. — The eyelets and hooks are next inserted,
or buttons are attached at this stage of the process. The
rapidity with which this is done is remarkable. One ma-
chine will place perfectly all the hooks and eyes in a pair of
shoes within the space of five seconds.

7. Stiffening Toe. — This is done by cementing a piece of
pulp board material between the under part of the tip and
the lining to prevent the shoe from curling up on the end.

8. Blocking Sole Leather. — Dies are made for different
sizes and shapes, and the outsole is cut from hea\y hide by
means of a powerful press.

9. Blocking Insole. — This is similar in process to block-
ing the outsole, but an inferior grade of leather is used.

10. Routiding Soles. — The roughly died out insole and
the outsole are separately reduced to exactly the desired shape
on a specially designed machine called the Planet Rounding
Machine.

11. Evening Insole. — The insole is passed through a little
machine which reduces it to an absolutely even thickness.

12. Splitting Outsole. — This is an operation similar to
the evening, but the machine is heavier on account of the
heavier leather that must be shaved and cut. Both machines
make all soles uniform in thickness.

13. Rolling Outsole. — The outsole is passed through a
heavy rolling machine where it is subjected to tons of pres-
sure between heavy rolls. This brings the fibers very closely
together, and greatly increases the wear of the shoe.

14. Channeling Insole. — In this operation a little slit is
cut along the edge of the insole, extending about half an inch
in toward its center. At the same time a little channel is
cut in the leather so that it may receive the thread and per-
mit the upper flap to be smoothly drawn over after the insole
is attached to the welt and upper.

ASSEMBLING INDUSTRIES 121

15. Cutting Heels. — The heel pieces are died out from
small scraps of leather.

16. Cementing Heels. — The small pieces are firmly ce-
mented together, and one piece especially selected is fastened
to the top of the heel, thus giving a good base for nailing it
to the shoe.

17. Compressing Heel. — The heel is put under great pres-
sure to give it exact form, and to increase its wearing quali-
ties.

18. Inserting Insole. — The insole is now attached to the
last, and the last is put inside the upper, and a pulling ovei
machine in the hands of a skilled operator is used to adjust
the last to the upper.

19. Lasting. — When the last is properly adjusted, the
shoe is taken to the lasting machine, where the upper is
neatly stretched over the entire last. This operation is one
of the most difficult and important in the shoemaking pro-
cess. If it is incorrectly done, the appearance of the shoe is
spoiled and its wearing qualities are greatly impaired. The
machine works with almost human ingenuity. It has a set
of fingers which grab the leather, pull it over the last, and
then it inserts, at frequent intervals, tacks to hold the leather
in shape.

20. Welting. — The welt is now sewed from the inside lip
of the insole so that the needle passes through lip, upper,
and welt. In this way all three are securely united, and the
welt protrudes beyond the edge of the shoe. Just before
the sewing has been done, the tacks, which were driven into
the last to hold the upper in place, are withdrawn.

21. Trimming. — The surplus portions of the lip, up-
per, and welt, are now neatly trimmed off, and the welt
is made to stand out evenly from the shoe. After this is
done, the tacks which held the insole to the last are with-
drawn.

22. Attaching Out sole. — ^The outsole. is covered with ce-

122 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ment, and is firmly pressed upon the insole and welt by means
of a heavy machine.

23. Trimming Sole. — The portions of the sole extending
beyond the welt are trimmed off so that both welt and sole
make an even edge. At the same time a flap and channel
are cut around the edge of the outsole, as was done in the
insole.

24. Opening Channel. — The cut channel is opened out on
a channel-opening machine, making it ready to receive the
stitch.

25. Stitching. — The sole is firmly stitched to the welt on
a powerful stitching machine.

26. Closing Channel. — The inside of the channel is coated
with cement, and the flap is smoothly drawn over so that the
stitches are entirely hidden.

27. Leveling Sole. — The sole is put under heavy pressure
on a leveling machine, which subjects it to a rolling process,
smoothing the bottom.

28. Taching JJpiier. — The portion of the sole designed to
receive the heel is not sewn to the welt. At this stage it is
nailed to the upper and through the insole, the nails being
turned by a steel plate on the heel of the last.

29. Heeling. — The heel is now nailed to the shoe and the
bottom cap put on the heel.

30. Finishing. — This consists of several steps, all tend-
ing to give the shoe its final form and finish.

81. Packing and Shipimig.

The diagram on page 123 (Fig. 15) shows graphically
the relationship of these various steps to each other.

The great number of operations necessary to produce a
shoe makes it important to order the processes in the most
economical manner. The ideal order of arrangement is the
straight, industrial line. The assembling industry may be
regarded as a river fed from many sources, the shipping room
corresponding to the mouth of the stream. The ideal plant

ASSEMBLING INDUSTRIES

123

is one which will make the rivulets flow into the main chan-
nel as soon as possible, and yet not flow in until all is ready

CuTMnc)

leather

tor M(>p«rs

SKivina or
levelfino

Cemeritinj

SorTmg
leather

Cu+tiaa
rips'

Omamentinj
Tip«i uppers

Sewinq tip*.
MPP«r^.fts
crwi lininq<

n^cntr

Cutfln<j
i;nin<ja

£i

Inserting
Insole

Stiff enina
roe

Ecjeltfttinj

.__

Laitln^

Welti n J

Trimminq

Attaehina

' '

Closing
Chonnel

Stitching

Opening
cnannei

Trimminq

Sale

<\l

—

- —

Level l>n<T
Sole

TacKinij
■ Upper

Heeling

— 1

raw

ce-winj
ma'ttrial

Finishini^

Rickinff

Shippinq

— r —

—

— —

Channeling
insole/'

Rolling

5pl.tf-ing

Out^ales

eVeni na

Btefflfin^
outsolcs

Block-in5
In^olcf

So\es '

Serfinq
So\e leoiHier

Cutting
heeU

dementi n<j
heeU

heets

Sketch showincs how linc of procbss in
direct producing assembling lnoastf?y is maoe^ to

APPROACH THe CONTINUOUS TVPET OF INDUSThY.

Fig. 15.— Shoe Manufacturing.

for their absorption, otheir\vise they wiU hinder progress.
(See Fig. 17.)

124 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

Almost every part of a shoe factory should be well lighted;
and since it is important that it be in the midst of a large
labor supply and easily accessible to good markets, both local
and distant, it is necessary to place the plant in either a city
or suburban location. Consequently, the plant cannot be
spread over too much territory, because not only would it
unnecessarily increase the interest charges on the property,
but would also increase the burdens of heating and power
transmission.

The general form and structure of a shoe factory is char-
acteristic of almost all of the plants of the direct producing
group. The establishments are units in themselves, having
few if any outbuildings.

The indirect assembling industries differ greatly in their
plant construction from those just considered. Nearly all
machinery-making plants require at least three comparatively
large auxiliary divisions aside from the machine shop,
namely, the drawing-room, pattern shop, and foundry. If
the plant is very extensive, these auxiliary departments may
increase until they include a carpenter shop, brass foundry,
blacksmith shop, boiler shop, punch sheds, galvanizing de-
partments, and perhaps several others. In addition to these
directly contributing plants one will almost invariably find
a pattern storage shed, a lumber shed, power house, boiler
house, and possibly paint shed, drying kilns, and other de-
partments of more or less importance.

The building of a vessel probably offers the most complete
set of operations common to any assembling industry- of the
indirect type. To construct a ship it must, first of all, be
designed in the engineers' offices and drawing-rooms. Here
the shape, size, and specifications for the hull, machinery,
and boilers are drawn up. The arrangement of the compart-
ments in the vessel for carrying passengers, cargo, and coal,
and for receiving the propelling equipment is shown. The
furnishings and equipment of all the various departments of

ASSEMBLING INDUSTRIES 125

the vessel are specified, and detailed drawings are made of
every part of the hull, machiner}'-, and equipment.

The drawings are then sent into the three main divisions
of the plant, each one of which carries out its assignments
according to the drawings and specifications issued, the
three parts being the Hull, the Boiler, and the Motive Power
Divisions.

A. Hull Division.

1. Forms and Templets Making. — In the mold loft of
the yard are received the drawings of all hull parts, and
in here are made all the forms and templets which are
to be used as guides by the workmen in constructing the
huU.

2. Keel and Rib Cutting and Shaping. — All the frame-
work of the vessel is cut from the structural iron and bent
into shape.

3. Plate Shearing^ Bending, and Punching. — The plates
which are to make the hull of the vessel are cut out in a ma-
chine called shears and shaped in bending rolls, and the
rivet holes are put in by powerful punches.

4. Keel Laying and Rihhing. — The foundation frame-
work for the ship is made by laying a hea^y piece of struc-
tural iron the entire length of the vessel, and from it at
right angles are set radiating ribs of varying shapes and
lengths, so that when they are covered with the steel plates
the vessel will have the designed shape and size.

5. Fitting Plates. — The plates which have been previously
punched and shaped are now fitted to the ribs and to each
other, the rivet holes are reamed out, and rivets inserted to
bind the plates together. All plates that are to be below the
water line are usually hand riveted, but above the water line
machine riveters do the work.

6. Piping. — When the framework begins to be covered,
the pipG and steam fitters put in all the piping necessary to

126 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

supply the complex organization of the vessel. In it are put
sewage systems, steampipe lines for heating the compart-
ments, and conveying steam from the boilers to the engines,
the plumbing for carrying hot and cold water for the conve-
nience of the passengers, and all piping necessary to supply
the machinery with water inlets and exhaust outlets.

7. Joinery Work. — ^Vhile the piping is going in and the
hull is being still further completed, the wood work is intro-
duced, and the carpenters and joiners put in all equipment
like staircases, flooring, doors, window casings, paneling,
and all other fittings specified by the contract.

8. Wiring. — ^Vhile the fittings are being installed, elec-
tricians wire the vessel throughout.

9. Caulhing. — At this stage all the seams are made
water-tight by having a tool go over and swell the edges of
the steel plates firmly against the side of the piece to which
they are attached.

B. Boiler Division.

1. Laying Out. — The plates are laid out on a floor and
marked for the shaping operations necessary to make the
boiler.

2. Puncliing. — The plates are punched for the rivets.

8. Flanging and Bending. — In order to make a boiler-
shell, the two headpieces must be turned over like the lid of
a baking-powder can, and slipped into a cylindrical piece of
steel, thus making a complete cylindrical boiler after all the
parts have been riveted together. The turning of the flange
in an inch and a half steel, which is the thickness of some
of the boiler shells, is a delicate and strength-requiring opera-
tion. The work is done on a boiler-head flanging machine.
The steel is highly heated, firmly held between the two disks
and then the edge is revolved against a roll. In a very few
minutes a complete bend or flange is turned over.

4. Fitting and Riveting, — The plates, which have pre-

ASSEMBLING INDUSTRIES 127

viously been punclied, are now put in place, the holes are
reamed out, and the rivets inserted.

5. Inserting Tiibes. — In order to present a large heating
surface to the water, the boilers are filled with a great multi-
tude of tubes through which the hot gases flow in their course
from the fire box to the stack.

6. Caulking. — Here all the seams are made steam-tight
by a process similar to the one used on the hull of the vessel.

7. Installing in Hull. — The finished boiler is now in-
stalled in the hull, the fire boxes are attached, and non-con-
ducting material is put around all exposed radiating surfaces
to economize heat.

C. Motive Power Division.

I. Pattern Making. — In the pattern shop the drawings
are received and models of the castings are made in wood so
that the molder can have a form to which he can build his
mold to construct the casting. The making of patterns is very
exacting work, requiring highly skilled mechanics to read
the drawings and interpret them accurately. As a result
there is comparatively little division of labor and no elab-
orate equipment in the pattern shop.

n. Foundry or Molding Department.

1. Mahing the Mold. — In the foundry the conditions are
much like those in the pattern shop, only here unskilled labor
can be used to a much greater degree. Moreover, the units
handled in the foundry are manifold heavier than those in
the pattern shop, and there is very little assembling done in
the foundry. The process briefly consists of inserting the
pattern in proper supports and then tightly ramming sand
around it. After the sand is fixed in shape the pattern is
withdrawn and the mold is smoothed off and coated with
some surfacing material, which will prevent the sand from
caving in when the molten iron is poured into it.

2. Core Mahing. — If a casting is to be hoUow, the mold

128 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

must be filled in with some solid material, the size of the hole
desired in the casting. These fillers are technically known
as cores, and the cores are made apart from the molds, dried
in ovens, and then set into the molds after the pattern is
withdrawn. The core is then anchored to prevent it from
shifting when the metal is poured around it. The mold is
then assembled and bolted together ready for the next step.

3. Casting. — After the mold is fixed the casting is made
by pouring the molten metal into openings reserved for its
reception at various parts of the mold. The filled mold is
allowed to stand until the metal has solidified and cooled.

4. Clemiing Castings. — After the metal has cooled, the
mold is withdrawn from around the casting and the adhering
portions of sand are chipped off by means of air hammers in
the hands of a rather unskilled class of workmen.

III. Machine Shop. — When the cleaned casting is re-
ceived in the machine shop, it is slightly larger than the
drawing calls for, and is covered with a scale which makes
perfect joints impossible between the parts. Hence the pieces
of iron must be cut, smoothed, and adjusted to each other
until they make a perfect fit throughout the entire mechan-
ism. The steps in the process are :

1. Laying Out. — Here the rough casting is picked up by
a crane and carried to a large, smooth, level table where lines
are accurately drawn, according to the drawings showing the
exact amounts that must be trimmed off in order to make
tight joints.

2. Planing or Finisliing Straight Surfaces. — The cast-
ings have their straight surfaces cut and smoothed on a series
of tools known as planers, milling machines, shapers, and
the like. The usual practice is to smooth off one surface and
use that as a basis for accurately cutting the other sides.
The large pieces are cut off on planers (see P, Fig. 21) and
large milling machines. Small pieces are handled on shapers,
small boring and milling machines, millers, and others.

ASSEMBLING INDUSTRIES

129

3. Finishing tlie Round Pieces. — Two kinds of round
surfaces may be cut, convex surfaces which are represented
by the forms of shafts and other similar pieces, and concave
surfaces as represented by the inside of cylinders and the
like. Shafts and such bodies are usually cut on machine
tools, known as lathes. The piece to be cut is firmly held
between two centers, and is revolved toward the cutting tool.

By courtesy of Niles, Bement. Pond Co., New York.

Fig. 16.— Horizontal Boring, Milling, and Drilling Machine.

This picture shows how general are the machines for large assembling industries,
and also how the individual motor drive is applied to machinery.

The concave surfaces are usually treated on a boring mill,
either verticle (see BM, Fig. 21) or horizontal (Fig. 16),
although much of this work may be done on lathes.

4. Finishing Irregular Pieces. — The cutting of gear teeth,
the putting in of key^vays, the drilling of holes and the mak-
ing of slots, the finishing of surfaces having compound curves,
and any number of incidentjil operations which must be done

130 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

in the shop, are performed on special machines designed foi
such purposes, as, for instance, gear-cutters, keyway cutters,
drill presses, either ordinar}'', radial, multij)le spindle or
portable, Blotters, and other special machines.

5. MaHng of Bolts, Nuts, and Small Parts. — Besides
the main castings which must be finished off and fitted, there
are hundreds of bolts and nuts, small rods, oil cups, tubes,
piping, washers, keys, and other pieces of greater or less size
necessary around the engine, in order to hold the pieces to-
gether, oil them properly, and to provide for the taking up
of wear and other incidental work necessary to make the
engine run, and keep it in condition while it is running.
These things are made on special machines, the most impor-
tant of which are the turret lathe, which is largely used to
make nuts and bolts of large size, and an automatic screw-
making machine which makes bolts and screws from the
straight rod of steel. This latter machine does its work ab-
solutely without the intervention of human labor after the
bar of steel has been inserted.

6. After All the Parts are Macliined, They Must he
Gathered Together on the Assembling Floor. — When one
realizes the thousands of pieces that go into a marine engine,
when one knows that the weight of some of these parts is
twenty tons or more, while the dimensions of others are less
than that of a cent, one can appreciate the fact that ingenuity
must be exercised in designing, building, and placing the
tools so that the parts will make one direct line from the
beginning to the end of their passage.

Machine-shop structure has long been a matter of grave
consideration on the part of architects and engineers. At the
j)resent time the gallery type is the approved one for a ma-
chine-shop building. In this design there are three main
divisions of the shop. (See Figs. 17 and 21.) Sections A
and C have two stories. B is kept clear of a second floor to
ellow for the passage of one or more large cranes which handle

ASSEMBLING INDUSTRIES 131

heavy castings. In some plants two tracks are made for the
cranes, one of which is superimposed above the other, the
more powerful crane being put above and used only for han-
dling the heaviest material in the shop. The lower track
may have several cranes of smaller capacity.

The small parts are carried by means of elevators to the
upper floors of the sides A and C. Here they are put through
the various machines necessary to get them into the finished
shape; and as each step is performed, they are moved for-
ward in the direction of the erecting floor, so that by the
time they are completed, they are ready to be lowered to the
assembling or erecting floor.

The heavy parts are laid out on laying-off tables and then
given over to the planers, millers, lathes, and other tools on
the lower floor. The machines also are arranged so that every
succeeding operation means bringing the large piece nearer
to the assembling space.

The placing of the erecting floor in such relative position
with regard to the remainder of the shop has several advan-
tages :

1. It is in one of the best lighted parts of the shop.

2. There are no floors above to interfere with the erection
of the tallest kind of machinery.

3. It is in a place where all parts of the floor are easily
reached, so that one can get to any part of the work under
construction.

4. It is under the heaviest cranes, so that all parts can
be readily handled.

5. It is the converging point for all material that goes
into the finished product.

6. It is accessible for shipping purposes.

In connection with a machine shop it is always necessary
to reserve a considerable portion of space for tool and store
rooms. The machines and workmen are hourly in need of
Bupplies and tools for their various jobs. Good practice places

ASSEMBLING INDUSTRIES 133

those divisions in a portion of the shop where the space taken
will not hamper the continuity of the process, and yet will
be most accessible to those operatives whose duties require
the greatest number of changes in tools.

In the shipbuilding j)lant under consideration there are
two erecting floors, one for large work and the other for small
work. The general course of the parts for both large and
small engines is the same.

The crane arrangement of the plant is one worthy of care-
ful consideration. If a small engine has been erected under
space A, the heavy crane above this floor can pick up the
entire engine and transfer it to the launchways without the
necessity of taking any of the engine apart. (See Fig. 17.)
If a big vessel is being built, the engines are erected on the
large erecting floor, and when completed are sej^arated into
as large divisions as can conveniently be handled by the
crane. They are then lifted to cars on the tracks TT, and
hauled to the launchways, where another crane lifts them
from the cars and carries them to the vessels.

Fig. 17 shows the arrangement of one of the most
recently constructed shipyards in the United States. It
does not possess a foundry, but otherwise its equipment
is complete, and it is one of the best arranged plants in
existence for inter-departmental communication. An over-
head crane with a capacity of 100 tons can run the entire
length of the combined boiler and machine shops, with
the mere opening of the door between them. In other re-
spects, too, it is well arranged. If, at any time, it should be
desirable to add a foundry, it could be added to the right of
the diagram as a continuation of the machine-shop building.
For convenience of working it is ideal. All divisions, even
the shipyard, are under cover, so that inclement weather need
never hinder construction. The arrowed lines show the gen-
eral course of work through the various departments to the
launched ship. The short railway connection across the shops

134 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

enables the ship cranes to handle anything that comes out of
either of the two shops, so that from the time the goods are
received from the outside world until the launched vessel is
ready to steam down the river there is one straight continu-
ous line of work with little if any retracing of steps.

The shipyard considered abo'>''e is an examj)le of an assem-
bling industry. The plant, however, with its construction,
excellent as it is, does not have many railway connections
for handling its output. Elaborate railroad connections for
such a puqjose are imxiecessary in shipbuilding, for the river
is the avenue by which the finished commodity is distrib-
uted. If a plant is handling a product to be distributed by
land, its railroad connections should be superior to those
shown above. It is also true that if its product is of such a
nature that it can be transported from department to depart-
ment by means of railroads instead of cranes, the former is
perhaps preferable.

The three preceding chapters have considered the kinds of
industries and the ideal methods of adapting plants to meet
their needs. The key to success in building a plant is to
make it handle the work in the cheapest manner; and the
cheapest maimer is the one which will send the goods from
the beginning to the end of the course with the least expen-
diture of time and labor. The architect, however, is foolish,
indeed, if he does not recognize that there are conditions that
may modify his ideal plans. Every manufacturer appreciates
the fact that to erect the cheapest building possible he must
spend large sums of money to provide for a contingency that
may never occur. This subject wiU be reserved for the next
chapter.

CHAPTER X

FIRE PRECAUTION, AND ITS EFFECT ON LAYOUT
AND STRUCTURE

A WELL-DESIGNED establishment may deviate widely from
the plans just considered, and yet be the best possible one
that can be constructed to suit existing conditions, a fact
amply illustrated by plants known the world over for their
economy in production. Apparently these plants violate
nearly every recognized principle that has been laid down for
the industries of their class. The Standard Oil Company,
for instance, has refineries erected at various points through-
out the country, and their arrangement individually mani-
fests a most scattered and ground-wasting design.

From the industrial and chemical standpoints, oil refin-
ing is a continuous analytical industr}'- having to do with the
handling of liquids. In many respects it is similar to sugar
refining. The crude oil is received and heated, and from it
are first driven off gas and the light oils. The residue is
passed on to other stills and subjected to further heating and
condensing operations until the crude petroleum eventually
becomes gas, benzines, light, volatile illuminating oil known
as "water white," a heavier grade called "standard white,"
another grade designated as ' ' straw white, ' ' machinery or
lubricating oil, paraffine oils, petrolatum, or vaseline, cylin-
der oil, refined paraffine, and coke. There are, of course,
other products from the refineries made by further separation
and treatment of the native petroleum, but they are all ob-
tained by the same means — successive distillation, filter
pressing, or sweating the crude oil and its derivg-tives. ThQ

13&

136 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ideal structure for an oil plant may appear to be one with
the lines of a sugar refinery, a high building situated near
waterways and railroad facilities. Why, then, do engineers
of the oil-refining business so waste space and power? Be-
cause oil is so inflammable that it must be kept as far from
flames as possible. One cannot be too careful, for in every
plant there are occasional outbreaks of fire in some portions.
So great is the fire danger in connection with oil refining that
insurance companies cannot afford to assume the risk. Fire
seems bound to break out somewhere in the establishment in
the course of time, and if the departments are not isolated,
an entire plant, worth millions of dollars, may become a heap
of scrap metal and rubbish. On account of the great danger,
an oil refiner}^ must be situated in some remote section apart
from other valuable property. It must have a large area, its
buildings must be widely separated, and every precaution
taken against fire loss. Fig. 18 gives some idea of the scat-
tered way in which the divisions of the distilling depart-
ments are situated, and shows, also, the way in which
buildings are separated.

A gas-making establishment affords another illustration
of a plant which can protect itself from fire only by building
on large stretches of ground and in remote quarters. Gas is
a product more inflammable than oil, but the raw material
is not so susceptible to ignition. Let a fire once occur in a
gas plant and the results may be calamitous. If a gas-holder
leaks and air creeps into the tank, a rise in temperature or a
carelessly struck match will give a vivid flash and a terrific
explosion. The proof of a fire is not a mass of flame, but a
lot of bent plates and twdsted beams of iron.

For ordinaiy kinds of manufacturing the causes of fire
may be divided into the common and the special hazards.
The common hazards include those fires which may occur in
any kind of a building, whether it be a department store or
a m^bcbii^ shop, a slaughtering establishment, or a cotton

FIRE PRECAUTION 137

mill. The special hazards include the fires which grow out
of some risk peculiar to a plant of any particular type.

A good classification of the common and special hazards
is found below, copied from an article by Henry A. Fiske,
entitled "Causes of Fire."

"The Common Hazards may be divided into the following gen«
eral classes and sub-classes :

Lighting :

Electric (Arc).

" (Incandescent).

Gas (City or Town).

Gasolene Gas.

Acetylene Gas.

Kerosene Oil Lamps.
" " Lanterns.

" " Torches.

Candles.
Heating :

Steam.

Hot Air.

Stove, Coal.
" Gasolene.
" Oil.
Power :

Shafting and Bearings.

Steam Engines.

Gas Engines.

Gasolene Engines.

Electric Motors.
Boiler (or Fuel) :

Fuel, Coal.
" Waste Material or Refuse.

Overheated Woodwork.

Sparks from Stack.

Defective Chimney.

Ashes.
Rubbish (or Sweepings).
Oily Material :

Oily Waste.

Other Oily Material.
Smoking.
Lightning.

Sparks from Locomotive*.
Miscellaneous.

138 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The Special Hazards will vary according to the class of risk,
but may be divided into the following general divisions :

1. Storage and Handling of Raw Stock.

2. Preparing Raw Stock.

3. Making, or General Manufacture.

4. Finishing.

5. Waste Material.

While some classes of manufacturing risks will have only one
or two of the above groups, others will include all of the divisions.

Besides the two general classes of causes, i.e.. Common and
Special Hazards, may be noted the Exposure and Incendiary iires,
which hardly admit of any general classification, and are not in-
cluded in these tables." i

The relative importance of these classes in causing fires
may be judged from this table:

AVERAGE PERCENTAGES BY GROUPS AND INDIVIDUAL HAZARDS,
ALL THE CLASSES COMBINED : ^

Per

Cent.

Common Hazards.
Group I.

Common Hazards.
Group II.

Special Hazards.

Light 6

Heat 2

Power 7

Boiler and fuel 12

Total 27

Rubbish and sweepings 4

Oily material 3

Smoking 2

Lightning 2

Locomotive sparks 3

Miscellaneous 3

Total 17

I. Storage raw stock 6

II. Preparing 8

III. Making.... 26

IV. Finishing 7

V. Waste materials 10

Total 57

^Insurance Engineering, "Causes of Fire," by Henry A. Fiske,
July, 1907, Vol. XIV, pp. 5-7.

2 Ibid. , pp. 13, 14 ; the percentages are evidently not quite exact,
as the total amounts to 101, J. C. D.

FIRE PRECAUTION 189

The main causes of fire are bad housekeeping and care-
'essness. Twenty per cent of all fires can be traced to the
fact that the owners of plants permitted the accumulation
of dirt, oily waste, and other easily inflammable material.
From the above table no less than 7 per cent of the common
hazard outbreaks are due directly to rubbish and sweepings
and oily waste, while among the special hazards 10 per cent
are the result of the improper disposition of waste materials.

Fires due to the lighting apparatus are to a very great
extent caused by carelessness. On the whole, incandescent
bulbs are safer than arc lamps; and, if the wiring and lights
are properly installed, electric illumination is, from the in-
surance point of view, preferable to any other kind. An
electric fire is almost invariably due to faulty installation,
lack of care in maintenance, or the careless use of the electric
lamp.

Power fires are commonly caused by poorly hung shaft-
ings, by shaftings not being properly watched, by hot bear-
ings, and loose pulleys. Belt holes running between the
main floors of a building are very dangerous risks, because
the friction of the belt is apt to start a fire, and the holes
between the floors are ideal means to promote its spread.

Boiler and fuel fires can be almost completely eliminated
by taking care to detach the boiler-room from the main
building and to construct it of non-inflammable material
throughout.

Among the special hazards the table shows that about 26
per cent of the fires have been caused in the making or actual
manufacturing process. Few fires are the result of one cause,
and usually the special hazard of a business acts in combina-
tion with some common oversight. For example, in a cotton
mill the principal hazards are in the openers or scutchers,
where foreign material, coming in contact with the steel teeth,
causes sparks which ignite loose cotton. Place the scutchel
on a clean floor and the fire will have little chance to spread

140 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

before it is quenched. In the card-rooms the air is perme'
ated with fine cotton, and the floors are apt to gather accu-
mulations within a very short time. If here an electric short
circuit takes place, or there is a badly installed electric light,
a fire is almost inevitable.

Flour-mill records show the following : Fires due to spon-
taneous combustion of stock and dust explosions, 12 per
cent, conveyers 4 per cent, grinding 8 per cent, cleaning ma-
chines 4 per cent, and special miscellaneous hazards 1 per
cent. Contrasted with that, 71 per cent of the fires are due
to common causes.^

In foundries special hazards total 82 per cent, in which
the cupola causes 86 per cent, the melting furnaces 13 per
cent, core ovens 9 per cent, molding and casting 12 per cent,
miscellaneous special hazards 12 per cent, and the ordinary
causes make up but 18 per cent.^

Shoe factories have 19 per cent of their fires caused in
cementing, 6 per cent in bottoming, 3 per cent in waxing
heels, 6 per cent in naphtha and naphtha blacking, 4 per cent
in the waste chute, with 11 per cent due to miscellaneous
accidents, and 51 per cent due to common causes.^

Although on many occasions fire would not occur were
carelessness not evident, the object of the builder of a factory
is to construct his plant in such a way that an occasional
oversight will not result in the destruction of his j)roperty.
At the present time there are two types of factory construc-
tion which succeed in limiting combustion — slow burning,
and fire proof.

The slow-burning type received its highest development
in New England among the textile factories, where it is

1 "Handbook of Fire Protection," by Everett W. Crosby and
Henry A. Fiske, Fourth Edition, p. 114.

2 Ibid.
«Ibid., p. 121.

FIRE PRECAUTION 141

generally known as mill construction. Mill construction is
less costly than fireproof work, and when combined with the
automatic sprinkler system, with reasonable care it makes a
safe building. The principles of mill construction involve
ten ideas.

1. There shall be no openings between floors, either to
admit belts, stairways, elevator shafts, or for any purpose
whatsoever.

2, There must be no concealed places in floors or walls
which will permit of the hidden development of a fire. This
necessitates the using of very heavy floor timbers, spaced
from eight to twelve feet apart, and the floors must be con-
structed of three to four inch planks with single or double-
top boarding. Thus all the joists are exposed and readily
accessible to hose or sprinkler water.

8. The floors must not only be free from large openings,
but they must be as nearly air and water tight as possible.
This demands, besides the use of the heavy timber mentioned
above, that the lumber must be well seasoned and laid down
in a skilful manner.

4. The outside walls of the building should be so built of
brick or concrete that there is no danger of fire breaking
through, and division walls are to be carried at least three
feet above the roof to prevent flames from leaping over. It
is also desirable to have these walls winged on either side of
the building to prevent a possible fire from leaping around
the edges.

5. If there must be openings in walls between depart-
ments, they are to be protected with heavy fire doors or wire-
glass windows, or fireproof shutters on the windows. These
are designed to confine a fire to its place of origin.

6. The elevator shafts, stairways, and necessary passage-
ways between the floors must be entirely enclosed in solid
brick walls on all sides opening into the plant. The only
exception to this is in the belt tower, where sufficient Bj^a^

142 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

must be allowed in the wall to permit the shaft or belting to
go through. The belting, however, does not pass from one
floor to the other. Even in the belt tower there is no direct
communication between floors.

7. The power house of the plant must be apart from the
main building anl not over one story in height. The height
of the fabricating building must not exceed five stories, or
sixty-five feet above the ground level.

8. Stacks, flues, and chimneys must be of brick or some
approved fireproof material.

9. The roof must be flat and smooth, with just sufficient
pitch to provide for proper drainage, and must be covered
with metal, gravel, or approved composition. Cornices
should be composed of incombustible material.

10. The building should be divided up into fire sections,
each one not exceeding 5,000 square feet, unless adequately
equipped with sprinklers.

Fig. 19 shows a sketch of the general protective schemes
used in a slow-burning building.

Mill construction, while often effective, has, partly
through lack of care and partly through the expensiveness of
lumber, fallen into disfavor, and is beginning to yield place
to fireproof construction. In the fireproof building, all the
precautions taken in mill construction are employed, but in-
stead of using timber in any j)art, it must use either brick,
terra cotta, concrete, steel, iron, or some other fire-resisting
material; and, moreover, all steel, iron, or other metallic
material which is likely to bend or weaken in the presence
of heat, must be adequately covered with non-conducting
fireproof material, which will not permit these supports to
bend or crumble in the presence of fire. The doors and win-
dows of the fireproof building must be made of other than
combustible material. Everything should be unbumable,
and at the same time the structure should be so made that
there will be no spaces or cavities to permit of the accumula-

FIRE PRECAUTIOM

143

tion of material away from easy view. No section, however
small, should be built in such a way that water or any other

tnttiSSORC TAMR

<^^'-

ELEVnTlOM OF APPf?oveD fvtILl. CTOMSTRUCTIOM
rACTORV SECTION A- A"

BUANK WALLS e^TENO 3 FEET ABOVE (?oor
JK^^jKk STAt^DAiTD n*?e DOOI75

M IH Hia:

STANDAPD wn?e f^Ua^S WINOOVUS
OR SHUTTERS ON EACH wlf^OOVO

30 FCET rwoi coif«e(^

. .^ I I-, L^ .^ » .-■ ,^

PLflKl OF flPPI?0wEO MlLU CoMST(?UCTlorJ'

Fig. 19.— Elevation and Plan of Slow-Burning- Construction.

extinguishing material cannot be quickly and accurately ap-
plied.

144 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

For a number of years there has been much discussion of
the question of the best building material for factory pur-
poses. At one time, brick-mill construction was considered
by far the most acceptable. There seems to be a tendency,
however, within recent years, to employ reinforced concrete,
to a great degree, as it is proving to have very satisfactory
fireproof qualities, and is cheaper than structural steel prop-
erly reinforced and covered with insulation. The Turner
Construction Company states of some structures it recently
erected : ' ' The cost of these buildings, according to estimates,
made by the Bush Terminal Company, based upon authori-
tative sources, was something over 10 per cent less than what
the same structure would have cost in first-class structural
steel. The cost as compared to mill construction was found
to be in excess of not over 5 per cent. ' ' The Robert Gaii
Company, a large paper goods concern, has two buildings
which contrast the value of the older style of protection with
the fireproof design. Across the street from the new build-
ing, erected by the Turner Construction Company, are two
slow-burning, mill-construction buildings of large size. "Un-
der the same conditions of ownership, occupancy, usage,
sprinklers, installations, contents and exposure hazards, the
rates on the mill-constructed buildings are 21.4 cents on the
building and 65.6 on the contents. On the reinforced con-
crete building 12.2 cents on the building and 29.6 cents on
the contents. Furthermore, the officials of the Gair Com-
pany are the authority for the statement that the building
saves them probably $5,000 a year in eliminating vermin
loss." With regard to the cost of construction, the mill
buildings have about a 5 per cent difference in their favor,
while the concrete cost 20 per cent less than structural steel
properly guarded.

The photograph (Fig. 20) shows an interesting fire test
which well contrasts the lasting powers of the two types
of building in case of fire. The fixe started on the fourth

rti

FIRE PRECAUTION 145

floor of the reinforced concrete building, and burnt itself out
without spreading to any of the other floors above or below.
It did, however, break through a wall opening into the build-
ing next door and completely burned out the two upper floors
and ruined the entire contents of the structure. According
to the Trussed Concrete Steel Company, ' ' special attention is
called to the fact that in the Kahn System Building the
sprinkler system was not completed, and was, therefore, not
working, whereas in the mill-constructed building the sprink-
ler system was in good condition. . . . Had the fire doors
been in place between the old and new structures, the fire
would undoubtedly have burned itself out without getting
into the mill constructed building."

For some time, concrete buildings were regarded with
disfavor by insurance men because of their liability to col-
lapse while in course of erection. Insurance Engineering
reports a number of such disasters, but investigation has
proved that the fault has been due to poor workmanship and
inferior design rather than to any inherent weakness in the
properly reinforced material. Until concrete, reinforced or
not, has completely hardened or set, it must be supported in
casings because of its more or less fluid condition. If care-
less inspectors and unscrupulous contractors neglect this
necessary precaution, there is grave danger that their penny
wisdom may cause the death of some workers and be the
means of their own financial ruin.

Aside from the material which makes up the body of the
building, manufacturers and others seek supplementary fire
protectors. The automatic sprinkler system is the most effec-
tive protector. For twelve years, the National Fire Protective
Association has a record of 6,064 fires in sjDrinkled risks
where the heat was sufficient to operate the sprinklers. Sixty-
seven per cent, or 4,039, of these fires were practically or en-
tirely extinguished by the sprinklers. Twenty-seven per cent,
or 1,647, were held in chgck so that additional help put them

146 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

out at a small loss. Only 6 per cent, or 378, of the fires were
uncontrolled by the sprinkler system. A careful study was
made of the unsuccessful systems, and the following table
shows the causes : *

Number. Per Cent

Defective or partial equipment 87 23

Failure due to water being shut off 87 23

Hazard too severe for control 38 10

Faulty building construction and obstruction 35 9

Exposure or conflagration 29 8

Inadequate or light water supply 21 6

Water supplies crippled by explosion 12 3

Defective dry valve or dry system 10 3

Water supplies crippled by freezing 9 2

Unsatisfactory action of high test heads 7 2

Unaccounted for and miscellaneous 43 11

378 100

The automatic sprinkler consists of a series of pipes ar-
ranged in a systematic manner under the ceilings of the
rooms with valves placed at regular intervals which are closed
with some easily fusible metal. In case of a fire the tempera-
ture of the room will soon rise to the point where the metal
melts, opening the valve and causing it to throw out a spray
of water.

In order to have an effective sprinkler protection, the fol-
lowing conditions should operate together.

1. The building should be so constructed and the sprink-
lers so distributed that there will be no parts either concealed
or otherwise out of range of the quenching stream.

2. There must be .a> constant supply of water great in
volume and sufficiently high, in pressure to make it always
possible to guarantee that the water will reach its designed
range at any time.

3. The pipes must have adequate diameter to permit of

"Handbook of Fire Protectionj •' by Crosby-Fiske, p. 236,

FIRE PRECAUTION 147

the passage of enough water to the valves, and the valves
must be freely acting at all times.

4. Care must be taken that the water does not freeze in
the pipes, and that acid fumes or chemicals do not affect the
working of the valves. If either one of these things operate,
the most expensive and elaborate system may prove utterly
worthless.

The Crosby-Fiske Handbook contains diagrams of a num-
ber of distributing schemes showing both the approved and
unapproved method of arranging the pij^es. No less than
125 sprinkler valves are also pictured, and of that number
only seven are approved by the Fire Underwriters' Associa-
tion of the United States.

To provide for cases wherein the nature of the risk makes
it impossible to prevent water from freezing in the danger
zone, there has been devised the dry sprinkler system. In
the dry sprinkler system air is pumped into the pipes in or-
der to back the water into a non-freezing zone. In the pres-
ence of excessive heat the sealing metal on the valves will
melt as in the ordinary system. In a few moments the air
will escape through the resulting openings in the spraying
devices followed by a stream of water.

In order to keep up the pressure in the sprinkler system
two schemes can be used, the gravity tank and the pressure
tank. The gravity tank is the older of the two ideas, and is
ample for all ordinary cases. Such a tank, according to the
underwriters' specifications, must have a capacity of at least
5,000 gallons. Ten thousand gallons is urged, and tanks with
capacities of over one hundred thousand gallons are not un-
common. The minimum height requirement for the tank is
not less than 25 feet above the highest sprinkler in the estab-
lishment. There are two methods of erecting the tank. In
establishments which are all enclosed within the same set of
walls, and in places where the ground is limited, a common
scheme is to perch it on top of the main building itself.

148 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

This place is objectionable because it tends to weaken the
building. Insurance comj)anies are opposed to having build-
ings topped with much weight, unless extra precautions are
taken to strengthen the holding walls. A later and more
approved plan is to have special structural work provided for
the gravity tanks. Where there are a number of buildings,
or extensi-ve grounds, a special tower is frequently constructed
for the vessel.

The pressure tank is an automatic device consisting usu-
ally of a cylindrical tank placed horizontally and located in
the upper stories of the building. Its cajmcity varies from
4,500 to 9,000 gallons of water or more, and it is kept two
thirds full of water. The other third consists of air under
pressure, always over 75 pounds to the square inch, and fre-
quently reaching 150 and more. Connected with the pressure
tank are two pumps, one for air and the other for water, so,
whenever the pressure drops down or the water begins to flow
out, the replenishing of both air and liquid can readily take
place.

Many establishments do not have sprinkler systems, but
nearly all do take the precaution to install fire hose. To
make a hose system efficient there must be a constant supply
of water under considerable pressure. This is usually main-
tained by either a gravity or pressure tajik, as described
above. There must also be installed a piping system, to
which are fitted frequent outlets for hose connection. Good
practice demands that the outlets shaU be between 100 and
200 feet apart,. and that the length of the hose shall be from
50 to 100 feet, neatly folded on swinging racks. The effec-
tiveness of hose protection depends upon two things, a con-
stant supply of water under pressure at the hose coupling and
people with presence of mind around to use it when occasion
arises.

Aside from the sprinkler system and the hose, there are
two types of hand protection, chemical fire extinguishers.

FIRE PRECAUTION 149

and the fire pail. There are several types of chemical fire
extinguishers, namely, the liquid hand extinguisher enclosed
in three-gallon upset tanks, the chemical tank on wheels,
built usually in 40 to 60 gallon sizes, stationary chemical
tanks, and dry powder extinguishers. The most effective
chemical extinguisher is the small upset tank combination.
It plays a jet of extinguishing fluid some forty feet for nearly
one minute. The extinguishing material usually contains
carbonic-acid; gas and suljjhate of soda in solution. When it
comes in contact with the burning mass, soda salts are de-
posited forming a coat of material which tends to exclude air
and retard combustion. While in operation a considerable
pressure is generated in the extinguisher. At ordinary tem-
perature a pressure of 125 pounds accumulates within the
tank, and if for any cause whatever the nozzle becomes closed,
200 pounds and over may be reached. One can see how a
cheap extinguisher may be a very dangerous instrument in
the hands of an operator, because any concealed weakness
makes it liable to explosion. The chemical tanks have not
as yet been thoroughly approved by the fire underwriters,
while the dry-powder extinguishers, according to the Crosby-
Fiske handbook, have been the subject of the following cir-
cular of the National Fire Protective Association. "In view
of the fact that several so-called fire extinguishers, consisting
generally of sheet-metal tubes filled with mixtures of bicar-
bonate of soda and other materials in powdered form, have
been widely advertised as suitable for use for fire extinguish-
ing purposes^ this committee has to report that in its oi^inion
all forms of dry-powder fire extinguishers are inferior for
general use, that attempts to extinguish fires with them may
cause delay in the use of water and other approved ex-
tinguishing agents, and therefore their introduction shoidd
not be encouraged."^

» "Handbook of Fire Protection," hy Crosby-Fiske. pp. 185, 1S6.

150 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

No matter how weU protected a plant is, it should alwayc
be so eqiiipj)ed that human beings can be informed at once
when a fire is starting. Even if we have an automatic ex-
tinguisher, there should be some quick means of giving an
alarm. In one case a sprinkler system operated so effec-
tively that it flooded an entire building, destroying far more
goods than the fire itself. It is also advisable to have a
sprinkler alarm in order to notify people that a fire is in
progress, because it is by no means impossible for a fire to
get utterly beyond control of the sprinkler system within a
very brief period of time. The sooner human aid is attracted,
the better it is for all concerned, because other means can be
taken to quench the fire, and after it is extinguished, all un-
necessary water damage can be prevented by turning off the
water. It is advisable to have a sprinkler alarm for another
reason. Sometimes the sprinklers accidentally break or leak,
causing water to flow when there is no fire at all.

Where there is no sprinkler system, automatic fire alarms
are especially desirable. There are many kinds of such de-
vices on the market. One common scheme of fire signalling
is to place thermostats from ten to twelve feet apart at all
portions of a risk. Fire alarms are used for all kinds of
purposes. Some are put on the journals of shaftings to
notify the engineer of a heated bearing, others are installed
in coal bunkers which are liable to catch fire through spon-
taneous combustion. The general principle of the alarm is
to have an electrical circuit, which is susceptible of being
closed by the expansion of two pieces of metal in the presence
of heat. To be effective they must work at all times of dan-
ger, and to keep them in working condition they have to be
subjected to periodic inspection.

In large risks, it is not advisable to depend exclusively
upon automatic signaling devices. Supplemental protection
is afforded by human watchmen who, from the standpoint of
efficiency, may prove of doubtful value. In one plant an old

FIRE PRECAUTION 151

employee was given such a place. His conception of the
duties of the position was to stroll around the building Sev-
eral times during the early evening. By ten or eleven o'clock
\ie felt assured that no self-respecting fire would intrude any
[ater, so, arranging for himself a comfortable couch he spent
the remaining watching hours in sleep. His case was not an
uncommon one, and insurance companies find that there is
only one means of making watchmen service trustworthy,
and that is to install time-recording devices at all portions
of a risk where inspection should be made. The first time-
recording clocks installed, were put in for the purpose of
keeping accurate tab on the fire watchman. If a watchman
is efficient and conscientious, he is one of the best fire pro-
tective devices known, but unless he is, his utility is uncer-
tain.

The fire watchman usually visits both the inside and the
outside of the risk, and makes a connecting link between the
inside and outside fire protection. Outside fire protection
may consist of automatic sprinklers located over windows or
other openings. It may be a device which will send a cur-
tain of w^ater over an exposed wall. In general, however, the
outside protection consists in placing water mains and fire
plugs or hydrants in such places that they will adequately
cover the entire risk. Good hose should be kept in the
vicinity of aU fire hydrants, enclosed in such a way that it
will be safe from the weather and yet be quickly available in
case of need. The watchman should be quick and intelli-
gent. He should, on discovering a fire, immediately turn in
the alarm and then try to extinguish the flame. The effi-
ciency of the outside fire protection, aside from the automatic
devices, depends upon three things: the water supply, the
effectiveness of the watchman and firemen, and the efficiency
of the hose.

Great care must be taken of fire hose, because cheap hose
is likely to break at the most critical moment, and is nevei

152 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

dependable. Fire underwriters and insurance companies in-
spect the various makes of hose on the market. On good
tried material they set their stamp of approval, so that no
one need unwittingly use defective material. The proper
way to keep the hose is to place it in houses installed within
the vicinity of the hydrants or fire plugs. Here also fire un-
derwriters make it easy for one to use the best plans because
they have drawn up careful specifications for hose houses

Many plants have well-drilled fire companies organized
from among their employees. These bodies are encouraged
by all underwriters. Some insurance companies insist upon
frequent unannounced drills, because no matter how good
and efficient the appliances are, they may prove utterly
worthless in the hands of a nerv^ous or incompetent crew.

Protection to property is important, but safety to life is
vital. Fire escapes are installed for the purpose of provid-
ing sure exits to the employees in case a plant becomes ig
nited. Two types of devices are common, the exterior and
interior enclosed fire escapes. The former is an iron stainvay
attached to the outside walls of the building, so arranged that
easy and safe exit can be made through the windows and
doors of every floor. The latter is a completely enclosed
shaft running the entire height of the building. (See Fig.
19, FE.) In this shaft are placed the stairways, and fre-
quently the passenger elevator, if the plant possesses one.
Coimection is made to each floor by means of an iron plat-
form extending from a door on the outside wall of the shaft
to another door some distance away, which opens into the
floor of the building. In this way there is no direct connec-
tion bet^^een the enclosed shaft and the building, yet there
is easy communication to the street from all parts of tiie
Btructure.

CHAPTER XI
THE BUILDING AND THE WORKERS

Man is like other animals — loeBt results require pleasant,
healthful surroundings. If compelled to work in a dark,
cold, or repelling environment, his output will suffer. The
comforts within the building and a spirit of hearty coopera-
tion among all the departments influence the physical state
and mental attitude of the employees.

Comforts can be provided when the building ia being
erected by providing for five things :

1. Abundant light.

2. Sufficient heat.

3. Good ventilation.

4. Adequate space for workers.

5. Convenient toilet and wash rooms.

1. Abundant Light. — There are many operations in al-
most every line of manufacturing, for which abundant light
is an imperative necessity. Without it the workmen are
hampered in their activity and can produce neither good
work nor a large quantity. If a plant must be erected on a
site which will enclose parts of the building in more or less
dark corners, the managers should so arrange their machinery
that those which require the greater light will be in the more
desirable sections.

Before the time of the steel frame, factoiy buildings had
to be made with a comparatively small amount of window
space in order to give proper strength to the structure; and
the higher the building, the more massive had to be the
masonry for the lower stories. Steel structural work overlaid
with brick made possible better natural lighting. A brick,

153

154 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

steel frame factory building can allow as much as 50 per cent
window space without endangering the strength of the struc-
ture. Still more recently, reinforced concrete has been used
quite extensively, and with increasing favor; because it is if
anything cheaper than the steel structure, and likewise per-
mits of quite as much window space. (See Fig, 20.)

The old style machine shops, like factory buildings, were
very deficient in window space compared with their modem
prototypes ; but sometimes stupidity will do much to make
a poorly constructed plant even worse. In a shop that was
not by any means ideally lighted, the management decided
that they needed some more storage room for iron plates and
other hea^y materials. .They appealed to the city councils
to have the street closed, which separated two of their de-
partments. ^Vhen that measure was put through they erected
a shed against the w^all of the machine shop covering nearly
all of the windows of one side of the building. It is true
that the shed was open on the street side, but its long slant-
ing roof covered the windows, and darkened the machine
shop.

The two methods of lighting a structure are by windows
from the side or from the roof. Hoof lighting has been used
for many years. Fig. 21 illustrates a skylighted room. The
objection to skylights is that shops thus lighted may be ex-
ceedingly warm on account of the direct rays of the sun. If
the ceilings are high, however, the discomfort is less, al-
though high ceilings will not obviate the unpleasant results
of the direct rays of the sun completely.

A great many architects have adopted the scheme of light-
ing their buildings from the top by means of the saw-tooth
roof. The saw-tooth light openings are usually faced to the
north. In this way the light is admitted, but the direct rays
of the sun are excluded for the greater portion of the day.
The saw-tooth window is not strictly a skylight, but it has
ill the advantages of the skylight without its disadvantages.

•3^,T3

J= a

THE BUILDING AND THE WORKERS 155

Light should be provided for the plant by day, by night,
and for such times of the day as outside light is inadequate
for the work in hand. A great many methods of artificial
lighting are advertised. The four common forms of electric
lighting are the flaming arc light, the mercury lamp, the
common incandescent bulb, and the ordinary electric arc.
The flaming and mercury lamps give very good satisfaction,
and are less expensive to maintain than the common incan-
descent and arc forms. They are, however, more expensive
to install.

The artificial light in any plant should be so arranged
that the worker will not be annoyed by any flickering or un-
evenness of the light nor disturbed by the casting of shadows.
Two great objections to the arc light are its shadows and its
flickering. The incandescent lamp gives a steady light, but
it casts shadows, and in many cases is not powerful enough
to give thorough satisfaction. The ideal light is one which
most nearly approaches daylight in its intensity and diffuses
the rays evenly during its entire time of running. The flam-
ing arc light and the mercury light approach these ideals,
and in general make a superior means of illumination.

2. Sufficient Heat. — The heating of buildings has
tested the ingenuity of engineers and owners for many years.
It depends of course very largely upon the type of manufac-
turing that goes on within the building, to what extent the
various departments shall be heated. A foundry or black-
smith shop can get along with considerably less heat than a
machine shop or textile mill. In any case, however, it is a
short-sighted policy for the management of a plant to give
its workers insufficient heat. The amount of money expended
in heating a plant during cold weather is more than paid for
by the increased capacity of the workers.

Several means of heating a plant may be installed :

(1) Hot Air from Furnaces Direct. — This method is
little employed and is very expensive on accoui^t of its great

156 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

wasting of fuel, and is unsatisfactory because it is hard to
distribute the heat. The writer knows of one instance where
a plant was heated in this way with large furnaces. During
cold weather it was almost impossible to get all of the rooms
comfortably warm during the entire day. The workers in
the poorly heated sections would sit with chilled hands try-
ing to perform their tasks, but their best efforts were ineffec-
tive, and during and after cold spells the operatives would
frequently be detained at home to nurse colds and other
maladies resulting from their exposure.

(2) Hot Water. — Hot-water systems of heating are eco-
nomical in small plants. They have objections in that they
do not aid ventilation, and if the system is cooled do^Ti over-
night, or for any period of time, it requires a great amount
of heat and a considerable length of time to get the system
working to its full efficiency.

(3) Steam Heating. — The most economical and generally
used system of heating in plants and workshops is to utilize
the exhaust steam from the engine, supplemented by live
steam from the boiler, whenever necessary. Steam heat has
the advantage of being easy to apply at any point by the mere
insertion of a coil of pipe. The objection to it is that it does
not actively aid ventilation; but under the best of condi-
tions special means must be taken to properly ventilate a
building which has a large number of occupants. Steam
heating is much more quick in its action than any other sys-
tem, and is easily handled.

Aside from the question of expense the ideal system of
heating is one which works hand in hand with the ventilat-
ing system. Properly handled, the combination of the steam
and hot-air systems succeeds in doing this. A scheme that
is used in clubhouses, hospitals, and other institutions of a
similar public character, is to have an arrangement something
like the one shown in Fig. 22. The steam pipes are placed
in front of the air port. The cool air from the outside enters

158 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the port, passes through the filter screen, between the steam
pipes, and from thence to the rooms.

In certain plants, like textile establishments, it is neces-
sary to have a considerable percentage of moisture in the air
in order to get the best results in working the fiber. To do
this humidifiers may be placed at the spray chamber, where
water is sprayed through the air, giving it any degree of
moisture required, and then the moist air is passed to the
heating coils. This scheme heats the room with hot air by
means of steam pipes. The air is conducted to the rooms by
flues carefully covered to prevent the radiation of heat until
it reaches the room. This scheme gives, when properly run,
an ideal system. It is, however, expensive to install and to
maintain, but once in operation, it provides not only for
heating but also for air circulation.

A cheaper means of keeping the rooms moist in textile
plants is to use the humidifiers directly. The humidifier is
a spraying arrangement located at various parts of the rooms,
which sends forth a fine, atomized spray of water or steam to
the degree required by the conditions of the process.

8. Ventilation. — A well-ventilated room should be free
from bad air, and flying particles of dust. A number of
devices may be used, the most common of which is to open
the windows at the top and bottom at various places through-
out the mill or factory. This scheme is unsatisfactory; the
change of air is too slow. If ordinary conditions of warmth
are to be maintained during cold weather, certain portions
of the room get too much air, others not enough, and drafts
are liable to give the workers colds.

Proper ventilation in grinding rooms and in special places
is of vital importance to the employees. A grinder's life is
Comparatively short, even under the best conditions, and
various states have passed very rigid laws regarding the in-
stallation of blowers and other ventilating apparatus. The
Blinois law for 1897 requires that hoods and hoppers shall

THE BUILDING AND THE WORKERS 159

be placed over grinding wheels in order to catch the dust and
refuse, which must be drawn away by a current of air to the
outside of the building. New York, Pennsylvania, Ohio,
Massachusetts, and all of the industrial states have similar
laws.

One cannot emphasize too much the advantage of abun-
dant light, adequate heat, and good ventilation. It has a
measurable influence, and has the psychological effect of
making the place inviting. One can hardly appreciate the
full significance of this until one has worked in different
kinds of plants. Where conditions are unfavorable, extra
effort must be made to do the work. The gloom and un-
pleasantness of the surroundings lowers vitality, and makes
both men and officials irascible and displeased with condi-
tions. Little annoyances in the work which would be passed
over without any comment whatever, are just sufficient to
cause loss of temper. The workmen do not know why they
feel out of sorts, but they feel the effects of these surroundings.

4. Adequate Space for the Workers. — Workmen must
have sufficient space in which to perform their operations.
A floor crowded with machinery is a menace to their safety.
Every machine should have abundant clearance space on all
sides, so that the pieces can be handled readily and with
safety, and no workman should be so placed that the passing
to and fro of anyone will distract his attention. Everyone
should have a convenient place to lay his tools where they
will not be interfered with by his fellows, and will not annoy
anyone in his vicinity. No exact rule can be established as
to the amount of space that should be allotted to each man.
There ought to be no undue crowding. No one likes to feel
that he is in any way an annoyance to those around him.
If one has room enough so that he caimot reasonably feel an-
noyed at the presence of those around him, and can perform
his work with safety to himself and his neighbors, he haa
sufficient space in the true sense of the word.
13

160 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

5. CoN^rENiENT Toilet and Wash Rooms. — Every plant,
whether engaging women or men, should provide the em-
ployees with convenient facilities for washing their hands
and faces, and for disposing of their clothing while they are
at work. Personal experience proves that the actual amount
of money saved by offering decent facilities more than makes
up the interest on the capital expended in the installation of
conveniences. No desirable workman, no self-respecting girl,
cares to go through the streets laden with the dirt and grime
of his or her occupation, or in shop clothing if there is any
distance to go and the work is of an unpleasant nature. The
manufacturer might as well recognize first as last that good
employees are self-respecting ones, and that self-respecting
people give attention to their personal appearance. If wash-
ing facilities are not provided, employees will provide sub-
stitutes, and will steal an unnecessary amount of time to com-
plete their ablutions by stealth. Foremen very often quietly
permit such breaches of discipline, if they are not too flagrant,
because it is so exceedingly difiicult to correct the abuse in
the absence of any regularly j)rovided place. If wash-rooms
are provided for all, no one need take any minutes during
the working day to secure water in his private bucket. If,
in addition to wash-rooms, individual lockers for the em-
ployees' clothing are installed within those apartments set
aside for washing, decisive action can be consistently taken
to prevent time stealing; because foremen will have no ex-
cuse for permitting any laxness of discipline. If the wash-
rooms are kept closed until quitting time, so that no one can
get to his clothing until he is entitled to leave, there will be
no object in stealing time.

To what extent should an employer interest himself in
caring for his employees? Should a concern invest money
to provide dinners and other comforts for the men at a low
rate or at cost? In the writer's opinion, the question to what
extent welfajre work should be carried on depends entirely

THE BUILDING AND THE WORKERS 161

upon what the plant is manufacturing and its class of work-
ers. A concern which manufactures a class of material re-
quiring the employment of cheap labor will find it question-
able economy to make investments of this character. Poorly
paid workmen are, as a rule, ignorant. They cannot afford
to pay a sufficient price for their meals to make restaurants
profitable investments for employers. It is also a question-
able policy to give things to workmen for less than they cost,
because by so doing the firm is making an open confession
that it is either overcharging the public for its goods, or un-
derpaying the men, and there is distinct danger that the firm
will undertake duties belonging to the community at large
rather than to the company.

If a firm employs a class of labor whose patronage will
make a restaurant and other activities a burdenless or profit-
able enterprise for the firm, the management might well con-
sider the installation of such service.

There are concerns in this country which give themselves
a great deal of free advertising by letting the public know
how well they treat their employees. Certain health-food
concerns are open for inspection the year round, and the in-
terested spectator will be shown the generous favors that are
showered upon the employees. Concerns of this character
are in a distinctively different class than the ordinary com-
petitive business. They can afford to carry on their philan-
thropies because the public pays for them. If one cares to
do a little mental arithmetic he can prove it for himself.
There are two very widely advertised articles on the market,
one of which gives less than a pound — to be exact, 14 ounces
— of wheat in a certain product which is sold retail at twelve
cents per package. If we count 196 pounds of grain to the
barrel and imagine that all the wheat ground goes into the
flour, which is far from true, we find that a barrel of flour
costs the consumers of that food about $25. Another concern
gives seven ounces of grain for ten cents, making it on the

162 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

flour basis worth about $50 per barrel. Selling their prod-
ucts at such famine prices, of course such concerns can afford
to pose as philanthro^jists, but a machine shop, textile estab-
lishment, or other competitive business simply cannot do it.
It neither pays as advertising nor in increased output on the
part of the workers.

Intelligent workmen as a class are not unreasonable. They
want fair treatment and like to be put into surroundings
where they can respect themselves. They do not desire to be
made objects of charity. They do appreciate efforts on the
part of the management to get into close touch with them,
they do like to work in pleasant surroundings, and are grate-
ful to the firm that brings them into a better and closer un-
derstanding with fellow workers and employers. Man is a
social animal, and prefers to work in a place where there is
good fellowship; but there is a distinct line to be drawn
between efforts which really cost the employer nothing and
do not lower the workman's self-respect in accepting them,
and the other kind which makes the employee conscious of a
condescension on the part of the giver.

CHAPTER Xn
THE POWER PROBLEM

Power is one of the prime causes determining the loca-
tion of industries. Certain districts in the United States
afford unusual manufacturing opportunities because of the
presence of falling bodies of water. A waterfall is the cheap-
est known form of energy. That does not necessarily mean
that it will give the cheapest power to a prospective manu-
facturer. A high drop and a great mass of water are merely
the raw materials from which to obtain energy to turn the
wheels of a factory. A thing is cheap only when a small
expenditure of money puts it into consumable form.

To convert the wasting energy of a roaring cataract into
productive income requires investments in several things.

1. Land Around the Falls. — The people who desire to
use the waterfall must secure the land on both sides of the
falls before they have a clear title to use the power; and, if
the stream is navigable, further permission from the state
and federal authorities must be obtained.

So far as purely engineering considerations are concerned,
water-power equipment demands :

(a) Space for a dam or reservoir for storing the water, in
•almost every case. At Niagara Falls and some other places

a dam is unnecessary, but such conditions are exceptions to
the general rule.

(b) Power-house site.

(c) A canal or trench to conduct the water from the river
above the falls through the turbine to the stream below the
falls.

163

164 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

In many cases where a dam is necessary no land is needed
for the site of the power house, the penstock, and flumes.
It depends very largely upon the type of plant that is to be
built and the nature of the falls as to how much land is ac-
tually necessary; but some must be purchased in any event,
and it frequently happens that the amount is quite consid-
erable.

2. The second item of investment is the hydraulic ma-
cliinery.

The main parts of the water-power equipment for a water
turbine usually consist of a dam which may cost thousands
of dollars, a long tube called the penstock or down flume,
which leads the water from the head race to the turbine, the
turbine itself, and the draft tube or draw pipe which con-
nects the turbine with the tail race. A penstock iu not always
a necessary part of the water-power plant, however, as it may
be part of the dam ; and, if instead of a turbine the hydraulic
engine happens to be an impulse wheel, there is no draft tube.

After the power has been generated it must be trans-
mitted. If the turbines cannot be directly connected to the
machinery, the manufacturer must invest in expensive elec-
trical equipment to carry the power to his plant.

In spite of these necessary investments water power has a
number of advantages over any other form of energy. It is
cheap to produce, because it requires neither the purchase nor
handling of fuel. The mechanism is simple and can be kept
in running order by a smaller number of people than is neces-
sary in a steam plant. No space is taken up by boiler plants
or by storage houses for fuel and ashes. Water power is
naturally clean. There are no smoke ordinances to fear nor
ashes to handle.

Its disadvantages, while few, are sometimes important.
A heavy investment may be necessary before it is possible to
utilize the falls. Frequently the manufacturer will require
ao little power that it is not worth his while to make an in-

THE POWER PROBLEM 165

vestment which will utilize even a small fraction of the cas-
cade. Unless one wants to consume a fairly large amount of
energy, the force of falling water is not cheap in spite of the
fact that in large quantities it is possibly the least expensive
power generated. This accounts for the fact that in the
vicinity of a great many of the larger falls throughout the
country, large power plants have been installed which manu-
facture power for sale. Small manufacturers may find it
profitable to purchase power as needed. The advantages of
purchasing power are considerable. Buyers are relieved of
the necessity of securing the water rights, they need burden
themselves neither with interest charges on the investments
in power plant and transmitting equipment, nor with sal-
aries to power-generating employees, nor with expenses for
repairs or maintenance ; and portions of the buildings which
would otherwise be taken up by a private power plant can be
devoted to manufacturing.

If a small manufacturer can agree not to call for a great
amount of power during the time the power plant has its
peak or heavy loads, very low terms may be obtained. The
power houses find it highly advantageous to keep a constant
load on their machinery, and in order to induce people to
distribute their consumption, they will make considerable
concessions to those who are willing to agree to use power
when the burden on the power house would otherwise be
light. Even if a plant cannot adjust its power consumption
so that it can get these very low rates, it may still be profit-
able to purchase power. In such cases, however, the pur-
chaser of power should take precautions to guarantee to
himself a constant supply at all times.

Ordinarily, conditions are such that a manufacturer can
neither use a waterfall nor purchase his motive force. He
must transform the lowest known form of energy, heat, into
power.

Two types of heat engines ?ire known, the direct comhuft-

166 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

tion, represented by gas, gasoline, and oil units, and the in-
direct combustion, or steam generator. Tlie essential differ-
ence between the two great classes of energy transformers is
that in the former case the fuel is directly introduced into
the cylinder and tliere exploded by a spark or flame causing
consequent expansion of the gases so generated and heated.
In the latter, the fuel first converts water into gas under pres-
sure, and then utilizes the expansive force of the steam to
convert the heat units into mechanical energy.

If a plant is small, the gasoline engine is an exceedingly
cheap power generator, and the probabilities are that this
engine will become much more popular than it is even now.
The gasoline engine is cheap to install and easy to run, al-
though the fuel is somewhat dangerous to handle, and insur-
ance companies are inclined to look upon it with disfavor.

Within recent years, the gas engine has become an ex-
ceedingly popular form of motive power. Two general kinds
are in use, those which utilize the ordinary gas from street
mains, and those which consume producer gas. The former
engine was the first used, and is very popular with small
manufacturers. It is easy to install, it being necessary only
to mount the engine on a small base, and to make proper
connections with the gas supply; no ground space is required
for a boiler, no chimney is needed, nor is it necessary to
store fuel. There are no boiler repairs, no handling of ashes,
and the cost of maintenance and attendance is low. The
objections to the engines are their noise, bad odor, and, if
the price of gas is high, their excessive fuel cost.

At one time, all gas engines were run from the town
lighting supply, and the owner of the engine had to pay the
full domestic rate for his power fuel. This, of course, makes
the gas engine an expensive apparatus if the amount of horse
power consumed exceeds twenty or thirty horse power. In
some sections of this country where natural gas is used, the
aid style gas engine is still the most profitable form of power

THE POWER PROBLEM 167

for a moderate sized factory. The city of Columbus, Ohio,
for instance, supplies natural gas for power purposes at a
rate as low as ten cents per thousand cubic feet; and in that
locality the gas engine is a very popular means of power
generation. Cheap gas is hard to get from ordinary town
supplies. If a manufacturer is to use more than twenty to
thirty horse power his gas engine becomes an expensive in-
strument with such a source of fuel.

Chemists for a long time bent their energies toward the
securing of a cheaper form of gas directly from the coal, and
the results of their investigations developed that a cheap gas
could be obtained in the form of producer gas. Engineers
have also been able to design engines w^hich can utilize this
kind of fuel. Technically, producer gas is understood to mean
the gas obtained by the partial combustion of fuel in a gas
producer. The ordinary producer gas is usually made by
driving air with or without the addition of steam or water
vapor through a deep bed of incandescent fuel in a closed
producer. Such gas is very poor for illuminating and heat-
ing purposes. According to one authority the calorific power
of one cubic meter of an average sample of semi-water gas is
1,432 calories, while the same amount of ordinary sixteen
candle-power illuminating gas is 5,693 calories.^ Improve-
ments have been carried on in making and using this pro-
ducer gas so that at the present time the producer gas engine
is a serious rival to the steam engine for both small and
large units.

Wherever gas is produced as a by-product, the gas engine
is superior to the steam engine. Within the past few years,
steel plants and other establishments, which in the course of
their work develop gas, have found the gas engine the cheap-
est form of power in existence. The Gary Steel plant in its

* "Producer Gas,'' by J. Enjerson Dowson and A. T. Larter,
5.99.

168 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

power houses has adopted the gas engine. Their electric
power station is equipped entirely with gas engines as the
prime movers. Their blowing engines are likewise gaa
driven.

Some of the recent gas engines are as large a^ 2,000 H. P.,
and on the continent of Europe there are twin tiindem en-
gines which develop over 4,000 H. P.* Although the large
gas engine is in its infancy, it is demonstrating an efficiency
which in the near future will give it first place among the
economical heat engines. In the first place, by using the
gas directly in its cylinders it saves a great deal more heat
than does the most economical steam engine, because the
latter must bum the gas under boilers and then utilize the
steam. A gas-engine plant takes up about one half to two
thirds the space necessary for a steam plant, which uses the
most compact type of steam engine. The large imit gas en-
gines, however, are economical only where the gas is devel-
oped as a by-product in some other part of the plant. Under
these conditions, it is cheaper to bum the gas directly in the
engine than it is to transform its heat energy into steam and
thence into mechanical power. If, however, the plant does
not produce gas incident^illy to its other manufacturing
work, or if the plant needs a boiler for heating, it is ques-
tionable whether steam power is not the more economical.

Two types of steam engines may be considered, the re-
ciprocating steam engine and the turbine. The reciprocating
steam engine attained a high stage of development years be-
fore the turbine engine was even regarded as a commercial
possibility.

The steam turbine has, however, now demonstrated its
efficiency, and in time it will probably displace the recipro-
cating engine. It may, for a while, dispute the field with

^Cf. Cassier's Magazine, July, 19Q9, "Recent Pevelopments in
liarge Gas-En^ne Design."

THE POWER PROBLEM 169

the gas engine. The steam turbine possesses the following
advantages :

1. It makes a great initial saving in foundation costs.

2. Compared with the reciprocating engine it requires
small floor space.

3. Its oil consumption is very low, and as no oil is con-
sumed in the cylinders, the condensing water may be used
directly in the boiler.

Its disadvantages, as compared with the reciprocating
engine, are as follows:

1. The first cost of engine is greater for equivalent horse
power.

2. If it does not operate with a condensing plant, it is
wasteful in power.

3. The condensing plant necessary for a turbine is more
expensive than that required for a reciprocating engine.

4. Its high speed makes it disadvantageous for direct
connection with certain electrical generators, and high speed
seems as yet to be necessary to develop the greatest economy
in the turbine.

An economical steam plant, whether it be reciprocating
or turbine, has a large number of subsidiary appliances to
reduce power cost. Three kinds of economies may be intro'
duced into the steam plant.

1. Those which make the water more suitable for steam
purposes.

2. Those which make the boiler and furnace more effi-
cient.

3. Those which make the engine more efficient.

Water contains either organic or inorganic impurities
held in suspension or in solution. If they are suspended
impurities, they can be removed readily by a filtering pro-
cess. If, however, the impurities are soluble, complications
arise in handling the water question.

The common and most undesirable impurities found in

170 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

water are inorganic, and may either corrode the inside shell
of the boiler or cause a non-conducting scale to form over
the tubes. In some cases the impurities will do both. The
corroding impurities are sulphuric, hydrochloric, carbonic,
acetic, and tannic acids. Those which corrode and form a
scale are iron sulphate and magnesium chloride. The scale-
forming impurities are the carl3onates and sulphates of lime
and magnesia and carbonate of iron. The third class of im-
purities is the most hamiful to the boiler, because the scale
formed within the boiler puts a sheet of non-conducting
material between the plates of the boiler and the fire. This
sheet shortens the life of the boiler, causing the insulated
plates near the intense heat to become soft and bend and
blister under the intense pressure on the inside of the boiler.
In fact, it may hajspen tliat the scale may develop so great a
weakness as to cause the boiler to explode.

Three methods may be taken to extract these impurities
from the water. The first, the cheapest and a much used
plan, which is probably at the same time the least effective,
is to boil the water before it enters the boiler either by using
the exliaust steam from the engine or by some other device.
This will drive out carbonic acid and tends to precipitate the
carbonates, but unfortunately the boiling process is not con-
tinued long enough, nor can it be conducted under the boiler
pressure, hence the action is incomplete, and a small per-
centage of the impurities is removed.*

Another method is to introduce some precipitating com-
pounds into the boiler. If tri-sodium phosphate or sodimn
fluoride be introduced, the heated water will have precipi-
tated from it both the carbonates and the sulphates of lime
and magnesia as phosphates or fluorides. These do not

iCf. Cassier's Magazine, April, 1904, Vol. XXV, p. 507, "Soft-
ening and Purifying Waters for Boilers," by J. C. W. Greth,
pp. 50&-514.

THE POWER PROBLEM

171

harden in the shell or fuse, but they are objectionable be-
cause the precipitation is expensive, and because heat is
wasted in raising tlie temperature of the resulting sludge.^

By courtesy of Dodge Manufacturing Co., Mishawaka, Indiana,

Fig. 23.— Inside View of the Eureka Water Softener.

The third and most effective scheme is to remove the im-
purities from the water by precipitation before they enter

^Cf. Gassier' 9 Magazine, April, 1904, Vol. XXV, p. 508.

172 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the boiler. The best precipitation agents known are lime and
Boda. The lime precipitates carbonates, the soda sulphates
and chlorides. The soda also tends to neutralize any acids. ^

The inside of an effective water softener is shown in Fig.
28. The raw water enters and falls on the wheel E, causing
it to revolve, thus making all the power necessary to actuate
the softener. A portion of the raw water is diverted from
this first receiving tank to saturator J", where a clear lime
solution of constant strength is manufactured. U shows the
flush valve for the lime tank. G contains the soda. The
water passes down through the center tube M after coming
in contact with the chemicals, and gradually works up past
the series of spiral plates JSf. These plates accelerate the sep-
aration of the precipitated impurities P as the water travels
upwards. The impurities collect as a sludge in S, while the
pure water, after it passes through the wood-fiber filter A, is
collected in the reservoir Y, where it is drawn off to a stor-
age tank or for use.

The Engineering Magazine gives a number of tallies from
which the following is quoted. 2

"A 5,000 horse-power boiler plant located on the bank of a river
and buying city water. The plant is a power station of a large
street railway system. The statement is taken from the power
house record for the month of March, 1905, and for the same month
of the year 1906. The engines in this plant are run surface-
condensing. When the boiler was fed with this condensed steam
and city water for make-up, it was found necessary to use a high
grade mineral oil for the cylinders, because the removal of oil by
skimming devices from the condensed steam (in order to fit the
latter for boiler feed) is more completely affected with pure min-
eral oil than with an emulsifying mixture containing animal or
vegetable oil. This will explain the decided drop in the cost of
oil per month.

> Cf. Cassier's Magazine, April, 1904, Vol. XXV, p. 509.
^Engineering Magazine, March, 1908, "Water for Economical
Steam Generation," by J. C. William Greth, pp. 945, 946.

THE POWER PROBLEM 173

SAVINGS EFFECTED OPERATING WITH WATER-
SOFTENING SYSTEM

Boiler Room Labor Saving $ 9.30

Boiler Repairs Saving 24.21

Oil and Grease 204.87

Water 59.46

Fuel, 154 tons at $1.59 per ton 244.86

$542.70

Cost of purifying water $35.25

Depreciation charge per month at rate of 10 per cent

on $7,000 58.33

Interest charge per month at rate of 6 per cent on

$7,000 35.00 128.58

Savings effected per month $414.12

Savings effected per year 4,969.44

Or almost 71 per cent on an investment of $7,000."

After the water lias been purified, the boiler plant uses
other schemes to increase economies. One is to heat the
water before it enters the boiler. It is a well-known fact
in engineering practice that the more heat the water con-
tains before it enters the boiler, up to about the boiling
temperature, the greater will be the saving in fuel to raise
the water to the boiling temperature.

"There is no great advantage in the introduction of feed water
at the steam temperature, because such a temperature cannot be
gained without an economic loss, either in flue gases or in steam
used for the purpose ; and, second, a moderate difference in tem-
perature increases the effectiveness of heat transfer and promotes
circulation." ^

To introduce water at the economic temperature, several
schemes are used. One practice is to introduce coils of pipe
into the flues and chimney of the boiler plant and to have

^Engineering Magazine, March, 1908, Vol. XXXIV, p. 955,
"The Argument for the Open Feed Heater," by Reginald Pelham
Bolton.

174 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the water heated on its way to the boiler by waste gases of
the furnace. This scheme is called the Economizer System.
In installing an economizer, care must be taken not to intro-
duce too many coils of pipe in order to get all of the heat
out of the gases, because if the economy is carried too far,
there will not be sufficient heat left in the gases to make a
draft for the furnace. On this account, the economizer can
be used with profit only in very highly organized plants,
which have the most expensive engines and all the accom-
panying refinements.

A more common and more profitable scheme for heating
the feed water for the boiler is to utilize the exhaust steam
from the engine as a heating agent. There are many varie-
ties of exhaust heaters on the market, but the general princi-
ple is the same.

Within recent years much attention has been devoted to
the heating of the steam after it leaves the boiler, in order to
extract all the moisture from it, thus making it more expan-
sive and effective in the cylinder of the engine. The heating
of the steam, after it leaves the boiler and before it enters the
cylinder, is called superheating. Superheated steam makes a
saving, because in passing through the cylinder it does not
leave any moisture in the walls of the cylinder to reduce the
temperature of the incoming live steam.

In considering the adoption of superheating, the added
interest on investment, the repair costs, and depreciation
must be balanced against the coal saving resulting from the
superheater.

An incidental objection to the superheater is that the in-
tense heat of the steam destroys the lubricating qualities of
the oil introduced into the cylinder, but that difficulty may
be overcome to some extent by using a dry lubricant.

Another boiler-room saving device is the automatic stoker,
of which there are many types and forms. Three main types
may be noted : the chain, the plunger, and the rocking grate.

THE POWER PROBLEM 175

The chain stoker consists of a revolving chain grate on which
coal is dropped and consumed as it passes under the boiler.
By the time it gets to the end of its journey, the fuel is ash,
and is dropped into the ash pit. In the plunger type the
coal is forced by means of a plunger gradually across the
grate bars, until it is pushed over the end of the fire box in
the form of consumed fuel. In the rocking grate stoker, coal
is dropped on a series of grate bars which are inclined toward
the ash pit and have an oscillating motion. The coal soon
becomes ignited and the moving bars gradually work it to-
ward the ash pit, so that by the time the fuel has exhausted
its heat-giving qualities its ashes are ready to be carried
away.

The automatic stoker makes several very important sav-
ings. It reduces the boiler-room labor, gives greater uniform-
ity in firing, and makes combustion more complete. The
automatic stoker often makes it possible for one to use an
inferior grade of fuel under the boilers. With the automatic
stoker have been introduced great improvements in the han-
dling of coal and ashes by machinery. Large plants have
for a number of years found these innovations decidedly pay-
ing investments, and now small plants are also finding them
profitable. They are tried and tested devices, and have
gained for themselves assured standing in boiler equipment.

All the economizers for the steam engine above noted,
however, give place in importance to the oldest saving appa-
ratus known, the condenser, a device designed to enable the
engine to utilize all the steam pressure generated in the
boiler. The atmosphere exerts a fifteen-pound pressure to
tlie square inch. If steam exliausts from the cylinder into
the open air, this pressure will be exerted on every inch of
the side of the piston, which is pushing out the expanded
steam. To eliminate this back pressure, which may retard
the efficiency of the engine from eight to fifteen or more per
cent, the steam is exhausted into a space which is kept as
13

176 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

nearly vacuum as possible. The partial vacuum is ol>
tained by attaching the exliaust to an enclosed cooling ap-
paratus which turns the exliaust steam into a few drops of
water. The condenser reduces the back pressure, and also
E/Ccomplishes other results. The water contains considerable
heat on leaving the condenser, and for many years engineers
worked on tlie problem of utilizing this waste. At first it
was pumped into the boiler directly, but the lubricating oil
in the cylinder being imited with the water caused much
trouble in the boiler by adliering to the tubes and plates, thus
impeding the flow of heat and likewise causing the water to
foam. Devices were invented to extract the oil from the
water before it was pumped back into the boiler. There are
now scores of oil separators on the market. Some are more
or less effective and some are very good. A good separator
both enables the boiler plant to save the heat and reduces the
water bills, and in some sections of the country this is a very
important item. Many plants find the water bills so consid-
erable that they make it a practice to use the surface rather
than the jet condenser, because the former keeps the original
boiler water free from contact with the cooling liquid, which
may be full of impurities, either suspended or in solution.
In it the exhaust is transformed into water by permitting a
cold stream to play on the outside of the pipes which carry
the steam from the cylinder. The cold water in time be-
comes highly heated on account of its contact with so many
hot pipes. In order to use it over and over indefinitely,
cooling towers or sometimes ponds are constructed. In the
former the water is pimiped to the top of a high elevation,
whence it falls over a series of plates, so that by the time
the bottom is reached, it is again cool enough to condense
the steam. The jet condenser accomplishes its task by spray-
ing a fine stream of water on the steam as it comes from the
cylinder.

After the power haa been developed in the cheapest poaai-

THE POWER PROBLEM 177

ble way within the limitations of the environment, the ques-
tion of carrying the power to the machines in the most eco-
nomical way arises. The writer knows of one plant where
tests showed that more than 43 per cent of the power was
lost between the fly-wheel of the steam engine and the ma-
chinery. There are five ways of distributing power from the
power house to the plant :

1. Pipe Steam from Boiler House to Engines. — One of
the oldest schemes is to have the boiler house located at
some central point and pipe the steam to the various de-
partments where the machinery is located. This scheme is
used where fuel is cheap. It occasionally may be seen in
steel plants of the older type and in the vicinity of coal
mines.

2. Tahing Power from Ply- Wheel l>y Pelts. — Another
uneconomical scheme, but one still frequently observed, is
to have the power taken from the fly-wheel of the engine by
a large belt to main shafts which run the entire length of the
various departments which utilize the power. From these
main shafts are run other belts to countershafts from which
the power is distributed again by belts to the individual ma-
chines. This scheme has two objections — it wastes much
power through the turning of useless shafting, especially if
the plant is one which uses its power intermittently, and it
is condemned by insurance companies because it is liable to
facilitate the spread of fire. The latter objection is overcome
to a great extent by a rearrangement of the main driving
belt. The belts are enclosed in a belt tower and are not per-
mitted to pass through the floors of the building. The main
belt runs small shafts within the tower. These small shafts
have other shafts connected with them by means of belts by
which are run the various machines. (See Fig. 19.)

There are two classes of belt drives, the older form con-
sisting of a wide band of leather or rubber composition,
which transfers the power from the generator to the depart-

178 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ments, and the more recent form consisting of rope belts or
drives as they are usually called. The old style is for large
powers rather more expensive and difficult to handle than
the rope drive. It requires greater care and skill in aligning
the shafts and pulleys. Since the belt tension is not self-
adjustable, it is necessary t£» tighten the bands so that they
can carry the heaviest loads without slippage. Thus there is
more wear on the journals than is necessary with the rope
drive. The rope drive claims several other advantages. With
it one can transmit power over long distances across spaces
exposed to the weather. It can transmit at any angle, and
the same pulley may drive two line shafts. The rope drive
is more economical in transmitting, and for large units is
cheaper to install and less expensive to maintain. It needs
less space to carry a given horse power, has a more steady
pull, is less noisy, is free from static electrical disturbances,
and it can provide for future extensions in power more read-
ily than the old style belt drive.

The rope drive, however, is for small units more expen-
Bive to install because it requires special sheave wheels and
a trained man to get it running, ^yhere the units are large
and one has an employee familiar with the rope drive, the
latter is more economical; Isut in small places where the
amount to be carried is not great, and is limited to small
distances within doors, the old style belt drive is a little
cheaper.

3. Electrical Transmission. — Electrical power can be
transmitted in two ways:

(a) By having large motors located at various parts of
the plant, arranged so that they can run a number of ma-
chines. This plan is known as the group drive. (See GD^
Fig. 21.) The group drive is a little less economical in
transmitting power, but it requires a smaller initial expen-
diture to install than do the individual motors.

(b) The individual motor drivQ. (See Fig. 16.) The

THE POWER PROBLEM 179

individual motor drive is expensive to install, but it is eco-
nomical of energy. Moreover, the separate motors make it
easy to determine the exact amount of power each machine
is using. It is economical in power utilization in that there
is no power lost when a machine is not running.

If, however, the motor drive rested its claims only upon
economy in power transmission, it would hardly deserve the
vogue it has obtained ; because, if the extra cost of invest-
ment is matched against the power saving instituted, there
is question as to whether there would be net gain by its in-
stallation. The motor drive has a fair claim to recognition
in that it makes possible other savings besides preventing
waste in power transmission. In the first place, it makes a
larger output possible, because it gives the operators such
perfect control of their machines. With that system of
power distribution the work-rooms become more pleasant to
the employees, there is more light, less dust, and usually
less danger. Where these conditions obtain, a concern gets
so much greater output that the extra investment necessary
for electrical power can well be afforded.

4. Air Pressure. — Air pressure is more convenient than
economical, but all things being considered, it is probably
the cheapest kind of power available for the driving of small
tools like chipping machines, riveters, and almost all kinds
of portable labor-saving devices used around a plant. It is
neither so cheap nor so convenient as electricity and belting
for stationary machines, and hence is seldom used for such
purposes.

5. Hydraulic Power. — Another scheme of transmitting
power is by means of water. Hydraulic pressure is conve-
nient for use in elevator service, or in any place where it is
desirable to exert great pressure. It is, however, for general
service somewhat slow working, and is also rather expensive.

This chapter has not mentioned all kinds of power gen-
erators nor aU the various transmitting devices. To do so

180 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

would require a special volume. The important factors in
both classes have been considered. No one can state abso-
lutely for either generators or transmitters which is the best,
all things considered, because conditions vary to such a de-
gree that one scheme may be very economical in one place
and in another be an unnecessary extravagance.

PART THREE
ORGANIZATION AND MANAGEMENT

CHAPTER XIII
THE THREE TYPES OF ORGANIZATION

In Parts I and II the questions which the lousiness exec-
utive must consider have been discussed. The creation of
an ideal equipment solves about one half of the problem of
industrial management. The plant must yet be put under a
satisfactoiy organization before it can be well managed. The
works manager must so combine the equipment which has
been given him with labor and material that the product of
the plant will be the cheapest and best that can be manu-
factured. The sales dej^artment must put the goods on the
market efficiently.

The works manager's field in the concern is limited to
the production department of business. His work begins
with the receipt of the order and ends with its shipment.
He has nothing to do with the soliciting of orders, he is not
concerned with the finances of the firm nor with its legal diffi-
culties. His work begins and ends with production. To
perform his duties ideally:

1. He must get the work performed rapidly.

2. He must get the work performed accurately.

3. He must get the maximum result from the machinery.

4. He must get the maximum product from the raw ma-
terial.

5. He must see that improvements in methods are intro-
duced.

In order to get this work performed, there have been
evolved three kinds of industrial organization — ^the military,
lunctional, and departmental types.

1B3

184 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The Military System of Organization. — This is the old-
est and was almost the only one until very recent years.
According to the military scheme, all power and authority
for directing the work emanate from one man, who is held
responsible for everything that is done in any part of the
division under his control. With his plan the leader does
not give general directions and then look for results. He
keeps control of all details that arise within his sphere of
command. The armies of former ages were run according
to this plan. The general-in-chief gave directions concern-
ing the health of the men, the way they should march ; he
saw to the provisioning of the troops, and in fact Caesar,
Napoleon, Frederick, and many other great military leaders,
directed the affairs of the state as well. Curiously enough
the modern army is no longer run according to the old style
military system. The health of the troops is under the care
of a distinct body of men, the provisioning and supplying of
the troops is attended to by another group of officials. The
commander-in-chief now decides upon the general plan of
the campaign. He plans where and how battles shall be
fought, but modern warfare no longer makes it possible for
him to lead his men as did the youthful Alexander, the
great Napoleon, or as did Scott, Lee, or Grant in American
history. The army now has a staff organization which cor-
responds very closely to the departmental system used in the
progressive firms of to-day.

With the military system of industrial organization every
officer in each division or subdivision is held responsible for
all that happens within his province. No matter what mis-
takes are made, he is the one who must stand the conse-
quences. If a foreman has charge of a shop and that shop
runs behind in orders, is extravagant in the consumption of
supplies or power, or is deficient in the quality of work
turned out, the foreman in charge is responsible. He is
given a division presumably sufficiently small to make it

THE THREE TYPES OF ORGANIZATION 185

possible for a reasonably good man to look after details, and
everything is considered distinctly within the scope of his
duties. He is expected to keep his men always supplied
with work. He must see that the machines are in working
order. He must be able to select good men and keep them.
If any question arises concerning how things should be done,
he should be able to give explicit directions. He must de-
tect work that is not properly done, know on whom to saddle
the blame, and must also remedy the faults. In a word, he
must be a thorough, all-round man to fill his place properly.
A trained man of ordinary ability can efficiently direct
from fifty to 'one hundred and fifty people in simple, ordi-
nary tasks which require little mechanical ability. It is only
the exceptional man of considerable experience and famili-
arity with the work who can profitably direct more than one
hundred and fifty or two hundred workmen. In continuous
industries, of both the synthetical and analytical types, a
large number of processes are simply and easily directed.
The work is almost entirely routine. The machinery is nearly
if not quite automatic. There are no great calls upon the
intelligence of the foreman, because there is very little to be
done outside of seeing that the workers are at their posts and
are turning out an adequate amount of material. In such
industries, the military organization is ideal, because the task
should be quite within the limits of the foreman's ability,
and the responsibility can be constantly fixed upon him. If
he fails to prove equal to his position, there is no great diffi-
culty in obtaining another man. Generally speaking, the
executives of these types of industries do not find their labor
management problems difficult of solution in the production
departments. Their energies can be directed toward the dis-
tributive department, and to finding a corps of workers who
will develop the mechanical efficiency of the machinery, look
to the economies of the processes and power-saving possibil-
ities and to other similar questions.

186 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

In industries which depend to a greater extent upon the
ingenuity and efforts of the laborer who cannot be so greatly
aided by machinery, the military organization shows ita
weakness.

The machine shops in the assembling industries were
the first to feel the limitations of the military system. Foi
many years, no one noticed its deficiencies, because the shops
were small and one man could attend to all the details and
give a fair degree of satisfaction, ^\^len, however, the de-
partments grew to more than two hundred workmen, the
scheme began to break down. Xo one could look after all
the details of so large a shoj). It was useless to discharge the
overseers, because no one could he found equal to the task.
It is a dictum in management that if punishment by dis-
charge does not eliminate failures and mistakes in an or-
ganization the scheme in itself is vitally wrong.

Works managers gradually came to appreciate that the
defects were due to the system, so they sought to eliminate
the weaknesses of too highly concentrated authority lay divid-
ing the leadership among several men, each being equally
responsible to the superintendent. This solved the problem
of giving the foreman a reasonable number of people to look
after, but it increased the unproductive labor expenses and
tended to make a conflict in authority and interests. For
example, the foreman of the machines in order to make a
good showing would be apt at times to have his men rush
the work through in a hasty manner, expecting the erecting
gang or bench hands to make good his deficiencies. The
bench foreman would also slight his work. If hea\y castings
were to be moved by the cranes, two foremen, equal in au-
thority, would put the riggers and crane men in an exceed-
ingly unpleasant situation because both would insist upon
immediate attention. There was but one out<3ome. The rig-
gers ser\'ed whomsoever they pleased. The writer is familiar
with a shop where the riggers were bribed by an ambitious

THE THREE TYPES OF ORGANIZATION 187

gang boss to attend to his requests. He needed the services
of the crane for a considerable length of time. However,
there were intervening periods of a half hour or so in which
the crane could be used to fill machines and move other cast-
ings. Instead of using this time and making the favored
man wait an occasional quarter or half hour, the riggers stood
])y the job, holding up the machines and erectors the l^etter
part of the day. Of course this is an exceptional and most
glaring example of the weakness of this scheme, but it is
nevertheless a weakness which grows out of too extended a
spreading of the military system.

Briefly summarized, the advantages of the military system
of management are :

1. It unifies the work, putting it all in the hands of one
individual.

2. It fixes the responsibility for the performance of tasks
in a definite manner upon certain individuals.

Its disadvantages are:

1. When a plant becomes too large the foremen are held
responsible for too many things, and cannot justly be held
accountable for blunders or for smaUness of productivity in
machines and men.

2. The foremen have so much to do that they cannot see to
the introduction of improvements as rapidly as is desirable.

The military system of works organization in a large con-
cern leads to chaos in management, because it fails to pre-
vent bad work and to stop the nursing of jobs. It has no
means of rewarding the efficient man or of pmiishing the poor
worker or loafer. Managers of plants who worked with the
military system in their younger days were puzzled as to why
the later generation developed so few good foremen and w'ly
it brought forth so many poor workmen. They did not rec-
ognize the fact that it was due not to a degeneration in the
younger members of the community but to an inherent fault
in the system. Thougbtf^d students felt the oeed of some-*

188 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

thing, but hardly knew what. Some plants tried varying
schemes of running their work. Several concerns hit upon
the plan of piece wage pa}Ti]ent and careful inspection of
material by independent inspectors who were held responsi-
ble. This scheme has worked with a reasonable degree of
success, but there are so many ways of fooling the inspector
and of getting bad work passed, and there are so many possi-
ble evasions of the piece wage scheme that it was soon re-
alized that another change was necessary before this method
would prove efficient. The piece wage pajTuent and inspec-
tion scheme did lead to something better.

Piece workers, on account of the fact that they are working
for themselves, are insistent upon allowances being made for
all kinds of contingencies. The manufacturer finds it more
profitable to lighten their duties, and to limit as little as
possible the movement of the workers. He soon begins to
study how the work can be divided and men assigned to cer-
tain parts. From this development arose the functional sys-
tem of organization.

Tfie Functional System. — The greatest exponent in Amer-
ica of the functional system of organization is Mr. Frederic
W. Taj'lor, a past president of the American Society of
Mechanical Engineers. Mr. Taylor has held a great number
of responsible positions in various sections of the country,
and has made an enviable reputation in the engineering
world. His paper entitled ''Shop Management," delivered
before the Society of Mechanical Engineers, is a memorable
contribution. In that paper he discussed the management
of a shop under the functional system of organization.

''Functional organization consists in so dividing the work
of management that each man from the assistant superinten-
dent down shall have as few functions as possible to perform. "*

^ Cf . Transactions American Society of Mechanical Engineers,
Vol. XXIV, Paper No. 1003, p. 1391.

THE THREE TYPES OF ORGANIZATION 189

The scheme is based upon the theory of the division of labor
as applied to management. A workman in a machine shop
according to this plan is not under one but several foremen.
Mr. Taylor advocates four shop bosses : gang boss, sj)eed boss,
inspector, and repair boss. The gang boss has charge of pre-
paring the work up to the time that the piece is set in the
machine. He must show his men how to set the work on
the machine in the quickest possible time and in the best
possible way. The speed boss has the function of providing
the proper tools for the workman on the machine. He cuist
see that the cuts are started at the right place and that the
machine is speeded up to its proper limit. The inspector is re-
sponsible for the quality of the work, and both workmen and
speed bosses must finish the work to suit him. The repair
boss sees that each machine is kept in working condition,
is cleLa, free from rust and scratches, and is properly oiled
In addition to these four shop overseers the workmen
come into contact with the representatives of the planning
department, whose function is to relieve the shop foremen of
all thought of how the work should be arranged and distrib-
uted to the machines. Four representatives of the planning-
room also come in contact with the workmen, the order of
work or route clerk, instruction card man, time and cost
clerk, and the shop disciplinarian. The route clerk writes a
daily list, instructing the workmen and all shop bosses as to
the exact order in Avhich the work is to be done by each class
of machines or men. The instruction card man states in
writing the general and detailed drawing to refer to, the piece
niunber and cost order number to charge the work to, the
special jigs to use, the depth of cut to be made, the number
of cuts to make, and the time in which the job should be fin-
ished. He also sets the piece rate. The time and cost clerk
sends to the men through the instruction card all the infor-
mation they need for recording their time and cost of work*
and he secures the proper returns from the men.

190 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

"In case of insubordination or impudence, repeated failure to
do their duty, lateness or unexcused absence, the shop disciplinarian
takes the workman or bosses in hand and applies the proper rem-
edy, and sees that a complete record of each man's virtues and
defects is kept. This man should also have much to do with read-
justing the wages of the workmen. At the very least, he should
invariably be consulted before any change is made. One of his
important functions should be that of peacemaker." ^

To quote Mr. Taylor again:

"The greatest good resulting from this change is that it becomes
possible in a comparatively short time to train bosses who can
really and fully perform the functions demanded of them, while
under the old system it took years to train men who were after all
able to thoroughly perform only a portion of their duties. . . ,
Another great advantage resulting from divided foremanship is
that it becomes entirely practicable to apply the four leading prin-
ciples of management to the bosses as well as to the workmen." ^

The four leading principles of management to which Mr.
Taylor refers in this last statement are:

1. A large daily task should be given to the men.

2. The men should be given standard conditions, making
it possible to perform the task.

3. They should be given a high pay for success.

4. They should lose in case they fail to reach the require-
ments of the daily task.'

Viewing the subject from a broader point of view, there
are other advantages to be gained from the functional organi-
zation.

1. The work is divided so that one man need attend to
only one thing. It enables comj)lete specialization of labor.

2. It definitely fixes the responsibility for the performance
of each function upon one man.

^ Transactions American Society of Mechanical Engineers^ VoL
XXIV, pp. 1393, 1394.

8 Ibid., p. 1394. 8 Ibid., p. 1368.

THE THREE TYPES OF ORGANIZATION 191

3. It allows the workman opportunity to think out im-
provements by enabling him to make an intensive study of
his work.

Notwithstanding all of these advantages the functional
system of organization has not proven popular or successful
in a number of plants where it has been tried. It causes
men to lose initiative. It has a tendency to shift and divide
the responsibility in spite of the contrary intention. This
has been found to be true in several places where the plan
has been tried. The difficulties that have been encountered
in carrying the scheme through are :

1. It requires a great amount of clerical work to fill
out instruction cards and write out all orders and minute
instructions necessary for the complete enforcement of the
scheme.

2. It is exceedingly hard at times to define clearly to
whom certain functions belong and on whom the responsi-
bility rests when things go wrong. For instance, no less than
eight bosses outside of the shop disciplinarian come into di-
rect contact with the workmen. Four of these men make out
instructions, and four others say how they should be carried
out. It not infrequently happens that the man who makes
out the instructions is somewhat vague in his directions, in
the hope that the speed boss or gang boss will make up de-
ficiencies. If a mistake occurs under these conditions, it
becomes a difficult matter to determine who is to blame^
because the instructions man will plead that they were not
interpreted correctly and the other bosses will assert that
such interpretations could be made. Sometimes the instruc-
tion card man will give instructions and the gang bosses
may see a better method. If they do, the chances are that
they will want to put their scheme into operation. Hence
there wiU be a conflict of authority. If a boss adheres to
the system and doesn't follow the best method possible under
the circumstances, the firm is paying for a system of man*

192 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

agement which is failing in its purpose of getting the goods
out in the cheapest possible manner.

3. It is cumbersome and expensive to operate. In every
shop the jobs must be assigned to men at all kinds of odd
times during the day. If a workman desires to start on his
job he must come into contact with at least three of those
bosses before he can do an}i:hing. There are usually several
men desiring jobs at one time. Under a system where the
workman is supposed to know how to set up a job and inter-
pret instructions, he merely needs to find out what he is sup-
posed to do, and do it, calling on the boss only when there
are complications. With this functional scheme he is not
supposed to act on his own initiative. As a matter of fact,
so many bosses really hinder the work. They irritate the
men and are expensive to keep up, because in a large shop
they must have a number of sets of bosses to carry out the
scheme as laid down.

TJie Departmental System. — In advocating the functional
system of works organization, Mr. Taylor made a valuable
contribution in that he brought out the idea of dividing the
work in such a way that it could be looked after by func-
tions rather than by comjDlete units. No plan of organiza-
tion can be successful unless it is workable. The military
type fails to be workable in large organizations, because it
is impossible to get men who are capable of filling the lead-
ing positions. With the functional plan it is possible to
train a sufficient number of men to carry out the functional
duties, but it is only under the most exceptional conditions
that these various functions can be clearly defined and the
scheme worked without conflict and irritation. If there is a
remarkable man at the head who can smooth all points and
be everywhere present whenever a difiiculty arises with con-
flicting ideas and authorities, the system has a chance of
working; but in this every-day world a highly sensitive or-
ganization of that character, no matter how perfect on paper.

THE THREE TYPES OF ORGANIZATION 193

is bound to be disrupted by the bumps and collisions of
daily strife. A finely adjusted, compensated astronomical
chronometer will keep perfect time, provided it is wound up
at certain stated inters'als, and is kept from jars and vibra-
tions and extremes of temperature, but for ordinary day use
to carry around in the pocket, a dollar watch may prove
more satisfactor)^ Works managers need the dollar-watch
combination, and they have found it in combining the good
features of both the military and functional systems of or-
ganization. Hundreds of i^lants at the present time use the
departmental system without being fully aware of what they
are doing. The departmental system does the following
things :

It divides the plant up into a number of clearly defined
departments, and puts each under the control of a gang boss,
who is given general directions to work to and is held re-
sponsible for results and not for servile attention to detailed
instructions. Thus in a machine shop there is a man to look
after the large machine tools, such as lathes, planers, and
milling machines. Another foreman will be appointed to
look after the erection of the large parts of the engine,
another wiU be given a valve-setting gang, and stiU another
may be given charge of the tool-room, and another will look
after the stores. The riggers or crane men wiU be under a
sub-foreman, who will have to keep all the machines supplied
with work. In addition to these, the repair department will
be in the hands of one man, a tool-making and grinding de-
partment in the hands of anothei^ and the stores department
in the hands of another. All ol these men wiU be under a
head foreman or superintendent. Each man is held responsi-
ble for the output of his machines. When a set of drawings
of an order comes into the shop, the head foreman wiU ex-
amine the drawings and call in the various gang bosses. He
will teU them the things they are to look after. Each man
clearly understands, from either written or orfd instructions,

194 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

his particular province. It is then his duty to keep his ma-
chines going and his men employed on their particular tasks.
The work, when performed and inspected, is passed on to the
other departmental boss. If the succeeding gang boss finds
any defects in the work, he must at once report the mistakes,
or he will be held responsible f<yr all defects uncovered by his
immediate successor.

The departmental system divides the work up into small
departments, each under the absolute control of a man, and
the departments are so related to each other that no individ-
ual workman will have to obey two bosses. The riggers, for
instance, in the military system serv^ed any man upon re-
quest. In the functional system, the riggers obey a rigging
boss who is at the beck and call of a half dozen functional
foremen. In the departmental system, the rigging boss learns
from the head foreman the conditions of the large castings,
and about when they are to be moved, and adjusts his gangs
in such a way that there will be a minimum of waiting
throughout the entire shop. If the head foreman finds any
men idle due to the fact that they cannot work because cast-
ings are not moved, he can at once ascertain whether the boss
rigger has arranged the movements correctly, or whether
there is insufficient crane service. Whatever the reason,
there is one man from whom an explanation can be de-
manded and readjustments promptly made. If the machines
are not turning out sufficient work or are giving poor service,
the departmental boss cannot blame the speed boss or an in-
struction-card boss. He has the machines to look after. If
his men are not efficient, he is to blame, because he should
report and discharge the delinquents. If the machines are
in bad condition, he is at fault, tecause it is his duty to re-
port defects and breaks at once, and insist that they be re-
paired. A machine boss should never let a machine get into
general bad repair. The erecting boss is to blame if the
erecting is progressing slowly or is poorly done. The great

THE THREE TYPES OF ORGANIZATION 195

advantage of this departmental system is that the responsi-
bility can be fixed; it is possible to train men to fill the jobs,
and it is impossible to have any shifting of responsibility,
because the men must show results in output, and not prove
that they have given or followed instructions.

CHAPTER XIV

THE LABOR FORCE

Before the emi^loyer can decide how he is going to run
his labor force he must determine what kind of labor he is
going to use, because his treatment of employees will be in-
fluenced to a very great extent by the labor personnel. The
labor force may be men, women, or children. Adult male-
labor is for the greater majority of the important industries
the most profitable kind of labor. There are, however, a
great number of industries wherein women and children may
be employed with profit, because they work for- less wages
and have their natural aptitudes for the work. The indus-
tries that can employ women and children are the textiles,
shoe factories, and other concerns which produce either light
materials or goods which require deftness in handling. We
may compare male and female labor in the following way :

1. Comparison of Male and Female Labor. — Male
labor is stronger and has greater physical endurance. Men
alone are able to stand long-continued heavy work, such as
is required in a shipyard, steel plant, or locomotive shop.

2. Men are more apt to be permanent employees. The
home is woman's ultimate sj)here. A woman's maximum
working period in industrial occupation is usually limited to
the time she leaves the grammar or high schools until she
reaches the age of thirty. In that time, she may serve an
apprenticeship to a trade, and become a capable, conscien-
tious employee. She is, however, apt at any time to marry
and leave work. Marriage increases a man's value to the
firm, because he now has new responsibilities to shoulder,
and is more desirous of giving satisfaction to his employer.

3. In general, men have more initiative than women.

196

THE LABOR FORCE 197

Man's initiative is not due to superior brains, but is the
result of greater opportunity. In the city, night schools,
Young Men's Christian Associations, correspondence schools,
and public schools offer inducements in the way of courses
of study which men can pursue during their evening hours.
These courses of study are designed primarily for men's
needs in industry. A great number of the evening schools
inform the employers of the progress their hands are making
in the courses, and the employer is consequently apt to give
such persons greater opportunities. Women in the same lines
of occupation do not have the same encouragement, they are
less able physically to work all day in the mill, and then to
carry on technical studies after working hours. There is a
lack of incentive to attend these courses, because they do not
in most cases regard their work as a life's career. Moreover,
thousands of women and girls, after they leave their factory
at the close of the day, have household duties to perform for
parents or for the male members of the household, who are
also engaged, perha]3s in the same mill or factory. Even if
they do not engage in those duties, a girl invariably has a
great deal more to do than a man; she usually makes much
of her clothing, often trims her hats, repairs her garments,
and looks after a thousand and one things which a man
turns over to some one else and pays for having done. All
these things combine to make man possess more initiative.
He has more opportunity to learn how to do harder things,
has a better physique, a greater incentive to make an effort
to learn, and less of other things to do.

4. Woman's clothing is a hindrance to her, and she can
be employed only in places where the machinery is of such
a nature that her clothing will make employment safe. In
places where she could otherwise be more serviceable than a
man, firms take the trouble to design the work-room and
machinery in such a manner that she can be employed with
safety.

198 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

5. Women's hours of labor are more closely restricted by-
law. Our labor laws justly seek to throw more protection
around women and children than around men. The manager
of a plant, however, cannot afford to overlook the fact that
these are disadvantages when he considers women as prospec-
tive employees, although it is only a question of time when
the law will place greater restrictions upon male labor.
Legislation and common justice require conveniences for
women in wash-rooms, and a supply of chairs for resting
during the working period. Their hours of daily and
weekly labor are shortened, and they may not l^e permitted
to work overtime except in rare and carefully guarded in-
stances.

6. Men are more disposed to form permanent labor
unions; and, in this respect men may be more difficult to
deal with than women as regards wage increases. Women do
not lack organizing capacity, but they are apt to regard their
industrial grievances as a temjDorary inconvenience not worth
the effort to remedy.

In the long run, powerful labor unions are better for so-
ciety than unorganized labor. If the laborers of all indus-
tries are united in their demands, no hardship is imposed
upon any manager, because all are on the same basis. If,
however, one concern is compelled to yield to certain de-
mands which involve an outlay of money, and its rivals are
not also put to the same trouble and expense, it is working
under disadvantageous conditions.

Although women do not readily organize into pennanent
labor bodies, in some respects they are harder to manage
than men. Many a successful foreman of men would wreck
his reputation if he applied his methods to women. Tact is
required to get good results from the girl in the factory, mill,
or office.

7. Women have an aptitude for certain classes of work.
In hosiery mills, silk spinning establishments, and a great

THE LABOR FORCE 199

many operations in textile works which require painstaking
care and deftness, women are better employees. In pottery
works her lighter touch and more appreciative sense of beauty
are valuable assets.

8. Women work for less money than men. Manufac-
turers and managers of establishments which employ women,
agree that in the lines in which they employ the women, they
do so because the same grade of men would demand a larger
wage.

Under these conditions, the manager of the concern must
study carefully his industry and the parts of his industry to
see where he can introduce female labor. In lines of work
where it is a question of deftness of fingers and lightness of
touch or skill in running small machines, women can be em-
ployed to advantage. Anyone who has visited the National
Cash Register works will be impressed with the proportion of
women and girls employed on drilling machines and ma-
chinery, which finishes and prepares the small iron and steel
parts of the register for the assembler's hands. Some electri-
cal manufacturing companies employ women exclusively in
a number of their departments. In commercial lines, large
firms employ several hundred women in their bookkeeping
departments. In one concern the entire bookkeeping staff is
composed of women who are under the direction of a man
head accountant. Whether women or men shall be employed
depends upon whether the work can be adjusted so as to suit
the peculiar aptitudes of women.

Child Labor. — In some classes of industries children
may be employed. The child can be used in a great number
of operations in textile plants, glass factories, coal breakers,
and other establishments. Society pays a high price for
child labor in decreased vitality and efficiency of its adults,
and is now restricting the liberty of the manufacturer to use
children. The child as a laborer has only one advantage to
the manufacturer, that of being cheap. Against this advan-

200 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

tage the manager may well weigh the disadvantages of child
labor.

1. Their hours of labor are limited by law in most states,
and in those industries where children are employed they are
apt to limit the hours of the adults, or to compel the manage-
ment to make disproportionate equipment for the child, as
compared with the adult, departments. The adults are de-
pendent upon the children for their material, and when the
child department shuts down, the adult department may
have to discontinue.

2. Children require more careful overseeing. They are
more apt to destroy or spoil material than their elders, are
harder to keep at work, and require a greater degree of atten-
tion and direction. Unless constantly watched, their little
minds wander from their tasks. They are full of animal
spirits, and when not under observation will play pranks,
which cause production to cease, and even frequently destroy
goods.

3. Children are more careless about machinery than are
adults, and more likely to be injured. They are not safe
workers in a plant.

The casualty insurance companies do not as a rule care to
insure children. Some companies refuse to accept risks upon
any child under fourteen years of age.^

Nearly every firm employs boys of seventeen and under
for messengers, elevator attendants, and similar workers.
The only reason for employing boys for such positions is
their willingness to accept low wages. In spite of his small
remuneration, the boy is not cheap when one considers his
unreliability. Some firms have had so much trouble with

^ This rule, if not already adopted by almost all casualty com-
panies, soon will be on account of the general tendency of states
to raise the minimum working age of children to fourteen years or

THE LABOR FORCE 201

boys in filing rooms, as messengers, and as office assistants
that they are now employing for such places men who are
well past middle life and are getting better results. Such
men ask for more wages, but they are well worth the extra
pay, for they are much more careful, reliable, and faith-
ful in fulfilling their duties than the youngsters, 'and far less
upt to leave.

From the broad, social point of view it is a question
whether boys ought to be engaged in such occupations as
messengers, elevator attendants, and office assistants. From
fourteen to eighteen a boy should be preparing for his future
career; if he cannot attend school or college he should be
serving an apprenticeship to some trade, or be working at
something which will enable him to fill a place of usefulness
in some office, store, bank, or similar place in later years.
Being an office, elevator, or messenger boy, is not giving him
this preparation; and he should not be so occupied unless it
is merely a temporary expedient to obtain a position which
will give him a chance to develop his faculties for greater
things. The engaging of men past middle life for such
places, on the other hand, confers a social benefit, and is
more satisfactory to the employer, all things being consid-
ered. Besides making his selections of laborers along the
lines of sex and age considerations, the manufacturer must
consider the educational qualifications of his employees.

Classes of Laborers. — All industries require one or
more of three classes of laborers as regards mental caliber,
education, and training.

I. Unskilled Workers. — In the continuous industry of
the synthetic type these men are used to a very great degree.
Large numbers of them are required in steel plants as la-
borers around blast furnaces, coke ovens, the steel furnaces,
ind other departments. In previous years they were more
*videly used than at the present time. Some years ago they
*yere employed in great numbers around paper mills, textile

202 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

establishments of all kinds, and other plants of a similar
nature, but this type of laborer is being largely eliminated
from the steel plant, and he is gradually passing away from
all plants as a type of worker. Conveying machinery is now
so extensively used and is so eSicieat that the unskilled la-
borer is no longer profitable. In the steel plants, he is still
needed to some extent to look after coke, slag, and other ma-
terials, to shovel dirt and to attend to cinders, but his days
are numbered, not only for steel making and continuous
industries, but for every other type of industry wherein the
only qualifications are strength and willingness.

In the analytical continuous industries, great numbers of
these laborers are required to perform the unpleasant work of
unloading raw sugar, of cleaning out apparatus around the
sugar, oil, gas, and meat-packing establishments. They are
also necessary as attendants in firing boilers and, before the
introduction of conveying machinery, were required to carry
the material from department to department. Conveying
machinery has eliminated the laborer as a draft animal, but
machinery has not made it possible to remove him from do-
ing a number of other unpleasant duties. In time it will,
and it is distinctly to the management's interest, as well as
society's, to take him away as soon as possible.

In the assembling industries, the unskilled worker was
formerly employed to transport the material from the foundry
to the machine shop and between departments in the shop.
He was a necessary adjunct around the shop to pull on the
ratchet for drilling holes, to sledge, to chip the rough cast-
ings and set the material up on the machines for the ma-
chinist to finally adjust, but now the new factory has the
overhead crane which reaches every part of the shop. A hy-
draulic lift or chain block can be placed at every machine,
so the laborer is no longer helpful there. Likewise, the air
drill, air hammer, riveting machine, and air-chipping ma-
chine oake away his job in chipping, riveting, and sledging.

THE LABOR FORCE 203

In a word, this laborer is being eliminated to such a degree
that he will soon become extinct.

II. The intermediate grade of lahorer whose qualifica-
tions in addition to regularity and good health must be :

1. Ability to learn to handle machinery of a more or less
semi-automatic type without injury to himself.

2. A willingness to attend closely to such machinery, see-
ing that it is constantly running properly, and is always
supplied with material to keep it producing.

3. Ability to keep the machinery in his charge in good
running order.

There are three types of machines:

(1.) The machine which needs an attendant merely to
keep it filled. Examjjles of this type of machine are :

(a) The endless screw-conveying device, which mixes the
various grades of raw sugar and molasses so that they become
semi-liquid, capable of being pumped from a tank to the top
of the building, from whence they are started on their refin-
ing process.

(b) Shears, punches, and other cutting devices used
around iron works, shipyards, and such establishments to
cut up scrap iron, plates, punch rivet holes, etc.

(d) A great many automatic screw-making machines and
nail cutters. These machines merely need a rod shoved in
at one end from time to time, or a roll of steel wire occasion-
ally started going through the apparatus. Everything else is
done completely by machinery.

(2. ) The machine that does most of the work but requires
an attendant to be present to make occasional adjustments
and to see that the machine is running in such a way that
the material going through is not being spoiled. Examples :

(a) The modern turret lathe, wherein the attendant neer"
only put the bolt or nut blanks in and see, that as each gtep

204 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

is completed on the machine the succeeding tool is applied
to do the next step at the proper time.

(b) The modern drill press. In some cases the drill press
has a great number of spindles, so that the one machine turns
Dut a number of pieces of work at the same time. Here the
attendant must be constantly on the alert to see that the vari-
ous spindles are supplied with material in order to keep the
entire machine productive.

(c) The modern loom — an excellent illustration of this
t}T)e of machine. The more recent loom will stop whenever
a thread breaks in either direction in the cloth. The atten-
dant must be capable of tying the broken threads and start-
ing the loom at any time. He must be deft in handling the
material and must not mix threads or get them tangled in
the weaving process.

(d) The nwdern spinning frames or spinning mules.
These do not require very great skill on the part of the atten-
dant, but do need adeptness in handling the fine threads.

(e) The slotting and modern key- way cutting machines
of the machine shop. The attendant must adjust the feed or
rate of cutting to suit the requirements of the material or the
machines, and must be able to select the proper tools for the
various cuts. The tools are readily learned and do not vary
with the same material and cut, so that after once learned
such machines can be run by an ordinary person.

(3.) The third type of machines requires great skill to
run because such machines are designed either to handle a
large variety of work which must be performed with exact-
ing accuracy or they require unusual steadiness of nerve and
skill to operate. Examples of these machines are:

(a) The large lathes and milling machines in general
machine shops. These machines get a great variety of work
every day; sometimes they are used to bore out cylinders,
again to turn shafting, and in fact one never can tell just
what they may be called upon to dQ,

THE LABOR FORCE 205

(b) Large planers and shapers are another variety of
the same class of machines. They may be used to cut
grooves, smooth off the top of plane surfaces, finish the sides
of castings, and the variety of castings they may be required
to handle is indefinite.

(d) The roll sets which make steel rails, structural iron,
ship plates, and other work of a similar type.

This third class of machines requires the services of the
third class of workers discussed below.

III. A high grade of slcUled labor. — The worker need not
be of powerful j^hysique, but he must be in good health, and
possess the following qualifications :

1. Ability to interpret accurately complicated instructions
either from blue prints, drawings, or from written or oral
communication.

2. Ability to concentrate attention on details, to use skill
and patience in accurately carrying out, in the concrete re-
ality, the pictured idea of the inventor or engineer.

This class of laborer is the most highly skilled non-pro-
fessional group of people in existence, and must be well paid.
Indeed, they frequently obtain wages which compare favor-
ably with the salaries of teachers and the incomes of lawyers,
doctors, and other professional men. They are needed in
foundries to make complicated castings, in the pattern shop
to produce the patterns for the foundry, in the machine shops
to run the large lathes and machines to which jobs of varied
dimensions are assigned. Such a man is entrusted with val-
uable material, and if he makes a mistake its results are far-
reaching. A pattern-maker once misread a drawing, making
the inlet into the condenser on the wrong side of the condens-
ing apparatus. The pattern went through the foundry. The
casting came into the machine shop and was machined in
many parts before the mistake was discovered, and it cost

206 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the firm some $800 to rectify the error. In another case, a
man in charge of one of the large lathes misinterpreted a
drawing and turned a certain piece of material one thirty-
second of an inch smaller than it should have been. The
casting was some forty inches in diameter and seventy-odd
inches in length. The mistake was discovered when it was
attempted to' fit it into the other parts, and it was utterly
■worthless — a loss of several hundred dollars to the firm. It
is absolutely necessary for men holding such places to be
thoroughly equipped. To train a man for this rank, he
must first of all be intelligent, naturally resourceful, and pos-
sess the innate ability to visualize a described idea. To ob-
tain the development of these latent qualities the workman
must have :

1. A preliminary education of such a degree that he can
readily acquire an accuracy in interpreting instructions. In
a word, he must have a receptive, active mind.

2. He must serv^e an apprenticeship. This preparation
must be in shops, night schools, and other places where he
can learn more than the mere routine of his tasks. He must
attain the attitude of mind that we look for in the profes-
sional man, the ability to depend on himself for carrying out
work, and an unwillingness to jump at conclusions.

The great problem of a manager in any place is to intro-
duce machiner}'- and so to arrange the work that the unskilled
worker will be unnecessary, and the call for the highly skilled,
man will be small. Unskilled exhausting toil is so monoto-
nous that the employee can take little or no interest in his
duties, and the work itself is so unprofitable that a concern
cannot afford to give a wage that will encourage men to be
alert and faithful. The man reasons rightly that if he gets
discharged he can get as good a job in another place ; and if
he doesn't find an opening, society will give him a living at
least, which is little, if any, less than he is now getting out
of all his exertion.

THE LABOR FORCE 207

An OTganizati n which must have a large number of the
third class of workman, the highly skilled man, is likewise
undesirable, not because his services are not valuable, but
because so much depends on him. His grade is so high that
it is difficult to obtain him. He is well worth his wages in
any organization if he is efficient and does not make mis-
takes ; but if he does err, even occasionally, considerable loss
may be entailed. Therefore it is highly desirable to get
machinery to do as much of his work as possible.

The second class of worker is the most desirable. The
advantages of this class are:

1. A short apprenticeship makes the man valuable to the
employer.

2. The employee with his limited capacity feels his de-
pendence on the employer, and is likely to be a faithful and
attentive workman because he receives a larger income than
the ordinary laborer, and could in most cases obtain employ-
ment only as a less valuable man in another place.

3. The employee becomes very dexterous in doing one
thing, and is thus able to turn out a large product.

It is possible to run but few plants without using more of
the third class than are readily available. They are neces-
sary as bosses and leaders of the first and second groups, and
unfortunately they cannot be developed rapidly from either
one of them. Shop managers find themselves seriously han-
dicapped, from time to time, in getting men who can take
charge of departments, who can become gang bosses and fore-
men in the various divisions of the organizations. So im-
portant has the specialization of labor become that the old
style apprentice in the shop has almost completely vanished.
A few weeks of practice enables a man to run a loom, but to
get a good loom foreman a man should come through an ap-
prenticeship which has taught him every part of the loom and
its running mechanism. It takes a very short time to learn
to run a drill press or milling machine, but it is an excee€^
15

208 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

ingly hard proposition to get a man who can tell what classes
of work should go on the machines, how they should be at-
tached, how the tools should be adjusted, and a hundred and
one other such matters. It requires little intelligence to
scrape in a valve seat, but it requires skill to set the valves
of the variety of engines that come into some of the large
general shops. So pressing has the need of this highly
skilled class of mechanic become that in sj)ite of the proj&t-
ableness of the second class, corporations now make every
effort possible to encourage young men to advance past the
mere routine of making goods. A number of large concerns
are devoting a great deal of attention to the development and
teaching of apprentices.

Apprenticeship. — The General Electric Company of
L}Tin, Massachusetts, about 1902 put into operation an ap-
prenticeship system which has proven to be beneficial both
to the firm and the employees. They organized a special de-
pai"tment devoted entirely to the training of apprentices. This
department was put under the direct control of a superinten-
dent, who was especially qualified to teach young men the
principles of their trades. The company also established
class rooms in the factory in which the boys are taught
drawing, and are given instruction in engineering science.
The training received by a student at Lynn is so broad "that
the graduate apprentice is prepared to fill a position as a
skiPed journeyman or as industrial foreman in any mechani'
cal establishment. ' ' ^

The Baldwin Locomotive Works of Philadelphia is an-
other well-knowTi firm which has established an apprentice-
ship system. They have not, however, set apart a separate
school or department for the training of the young men. A
learner goes into the various shops and departments and

1 The Annals of the American Academy of Political and Social
Science^ Vol. XXXIII, No. 1, January, 1909, p. 143.

THE LABOR FORCE 209

gathers knowledge and experience from things as they actu-
ally go on in the usual course of events in the works. In
order to provide for several classes of apprentices they have
made provision for three classes of applicants.

Ap2)r entices of the First Class. — The first class includes
boys of seventeen years of age who have had a good common
school education, and who bind themselves by indentures
(with the consent of a parent or guardian in each case) to
serve four years; to be regular at their work; to obey all or-
ders given them by the foreman or others in authority ; to
recognize the supervision of the firm over their conduct out
of the shop as well as in it; and to attend such night schools
during the first three years of their apprenticeship as will
teach them, in the first year, elementary algebra and geome-
try; and in the remaining two years, the rudiments of me-
chanical drawing.

Apprentices of the Second Class. — The second-class in-
denture is similar to that of the first class, except that the
apprentice must have had an advanced grammar school or
high-school training, including the mathematical courses
usual in such schools. He must bind himself to serve for
three years, and to attend night schools for the study of me-
chanical drawing, at least two years, unless he has already
sufficiently acquired the art.

Ajjprentices of the Third Class. — The third-class inden-
ture is in the form of an agreement made with persons
twenty-one years of age or over, who are graduates of col-
leges, technical schools, or scientific institutions, having
taken courses covering the higher mathematics and the nat-
ural sciences, and who desire to secure instruction in practi-
cal shop work.

The indenture or agreement in each case obligates the
company to teach the apprentice his art thoroughly and to
furnish him opportunity to acquire a practical knowledge of
mechanical business. The finn is also bound to retain the

210 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

apprentice in service until he has completed the terms of the
indenture or agreement, provided his services and conduct
are satisfactory. In all cases the firm reserv^es the right to
dismiss the apprentice for cause.

The rates of pay in the different classes are as follows :

1st year 2d year 3d year 4th year
per hr. per hr. per hr. per hr.

Apprentices of the First Class 7c. 9c. lie. 13c.

Apprentices of the Second Class 9c. lie. 13c.

Apprentices of the Third Class 16c. 20c.

In addition to the rates mentioned above, apprentices of
the first class each receive an additional sum of $125, and
apprentices of the second class an additional sum of $100,
at the expiration of their full term of apprenticeship.

By the course of training provided for in this system, it
is believed that a great benefit will accrue to the mechanic
as well as to the employer. To young men who have received
a thorough technical education, the two years' course in shop
work is especially recommended.^

Mr. N. W. Sample, superintendent of apprentices in the
Baldwin Locomotive Works, states that the system has proven
quite satisfactory^.

"Three years after the first indentured apprentice completed his
term, there were employed over two hundred graduated, first-
class, all-round mechanics capable of assignment to any shop, and
of this number fifty occupied places of responsibility as heads of
departments, foremen, assistant foremen, contractors, and leading
workmen. It is no longer necessary to go outside of the works
for any talent desired." ^

The Westinghouse Electric and Manufacturing Company
is another firm which is laying much stress upon the proper

1 Circular No. 3, Apprenticeship System, Baldwin Locomotive
Works.

- The Annals of the American Academy <ff Political and Social
Science. Vol. XXXIII. No. 1, January, 1909, p. 177.

THE LABOR FORCE 21\-

development and training of young men for their works.
They have two apprenticeship systems, that of the Trades and
that of the Engineering, The former is designed for young
men Avho have not had a technical education. The latter
is intended for graduates of technical schools and colleges.
The Trades Apprentices are recruited from young men
between the ages of 16 and 23 years. All under 21 years
must have their parents' or guardians' consent embodied in
the agreement which is made with the company. The term
of service for the Trades Apprentice is four years, while that
of the engineering class is two.

The company is generous in its treatment of the men.
They are given veiy fair remuneration during their term of
service, and are promoted from task to task as their capabil-
ities develop. The promotions are accompanied by graded
increases in wages. The trades apprentices are started at 9
cents per hour, and at the end of each year receive an increase
of 3 cents per hour until they complete their term. The en-
gineering men are started at 18 cents per hour, for which
sum they work one year of the time, or 2,740 hours. After
this first year of service, they are remunerated at the rate of
20 and 22 cents per hour, the former rate being granted for
the first six months of the second year, and the latter being
for the next six months.

The firm takes care that the young men to whom they
grant the privileges of apprenticeship have the fundamental
training and native ability to make proper use of the oppor-
tunities. Those who desire to become enrolled in the work
are obliged to make application in their o^ti handwriting,
and must tell their father's name, state his business, they
must give their name, age, height, weight, educational and
other training, the foreign languages they speak, the degrees
they have received, and the schools or colleges they have
attended, and no one is considered who does not submit a
recent photograph.

212 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

While they are serving their time an exact record is kept
of their conduct and performance within the plant; and, if
they are trade apprentices, their outside night school work is
carefully graded and recorded. They are marked for work-
manship), personality, and outside class work. A young man
has an incentive to do his best in every department ; because,
if at any time he becomes incompetent through neglecting
his work or studies, or is insubordinate, he is liable to dis-
missal. Dismissal means he loses both a job and a chance
to better his future condition. If he honorably completes the
term of service, the firm in the case of trade apprentices pre-
sents a substantial reward in the form of $100 and a diploma,
which tells the world that he is competent to follow some
definite line of work. The engineering apprentices receive
no gratuity, but obtain certificates.

Nothing so clearly indicates our progress both in the~in-
dustrial and educational fields as do these highly organized
apprenticeship systems. This development has taken place
within the last ten years. Indeed it is not that long since
apprentices in some places were started in at $2 per week,
and raised a dollar or so every year until they were earning
a weekly wage of $6 by the time their terms expired. In
the older shops, his training depended very largely upon the
caprice of his foreman and his own assertiveness. If he were
wide awake and insistent upon getting acquainted with all
classes of work which went on in the shop, he would get a
good training. If, however, he were not a favorite or a for-
ward kind of youngster he would frequently secure a poor
training for a future career.

The writer knows of one plant which still has the old style
of apprenticeship contract, and the trouble it has had to find
competent foremen, gang bosses, and workmen is evidence
that a far-sighted, generous policy is the most profitable.

Individual Ability. — Xo firm can hope to be successful
if it is dependent upon unusual ability of any considerable

THE LABOR FORCE 213

portion of its workers. A large number of fimis whose work
is of luch a nature that a formal system of indenture is inad-
visable or impossible have adopted the policy of supplying
an understudy of some kind to every man who has charge of
a department containing a number of men. This assistant
or helper is expected to acquaint himself with all the duties
of his chief, and is supposed to act in his absence. In this
way the plant is never at a loss to fill any position which
may be vacated in any department. One large organization
engaging some 40,000 employees will not promote one from
a lower to a higher position unless that same man has trained
a subordinate to fill his position. This insures to the firm
available workers for every possible position, and it also has
a tendency to develop a very friendly feeling between the
heads of departments and their assistants, because the de-
partmental head sees that it is to his distinct interest to have
capable subordinates.

Another firm takes the attitude of fearing the coming
man. Every foreman or division head likes to impress all of
the superior officers with the idea that, if he leaves, the de-
partment will suffer. In a measure he speaks the truth, be-
cause those individuals take care to have subordinates who
possess few of the larger qualities needed by men of initia-
tive. The finn as a consequence is terribly handicapped, and
as is to be expected, the work in the departments is so
unsatisfactorily performed that every few years there is a
general "shake-up" in the plant, entailing the resignation
and dismissal of a large number of the departmental heads.
Thus the short-sighted policy pursued by every one in the
plant to hold his job is the very thing that is hindering his
personal advancement and the general prosperity of the firm.
This concern has not paid a dividend on its stock for more
than a half dozen years, while the former company's stock
has averaged 7 per cent for a generation.

CHAPTER XV

THE PAYMENT OF THE WORKMAN

Ix order to get the maximum product from any set of
employees, the manager must consider:

1. The best methods of keeping the men employed at
their maximum limit while within the plant.

2. The best methods of making their work accurate.
When one establishes a wage scale he should have those

two objects in mind.

The greatest incentive a man can have to work faithfully
is to be paid according to some scheme whereby his remu-
neration is directly proportional to his output. How to estab-
lish a wage scale which will yield this maximum output for
a minimum wage cost is a problem that has troubled man-
agers for years.

The oldest scheme of wage payment is to pay the worker
a certain fixed sum for the time he is employed in the plant.
In the hands of a vigorous overseer thoroughly conversant
with all the work in the plant, the time system proves satis-
factory provided the plant is so small that the foreman in
charge can keep in constant touch with all that is going on.
From the employer's point of view it might appear that
nothing can be more perfect than the time system of wage
payment; because every increase in output that the man
makes means an absolute gain to the owner of the plant.
The curves A A' in Fig. 24 show how increased exertion
contributes to the j)rofits of the firm; the employee gets the
same compensation whether he does one piece or a hundred,
while the employer can see with glowing satisfaction his
wage cost per unit dropping downward. There is but one

2L4

THE PAYMENT OF THE WORKMAN 215

difficulty with which the employer must contend in this re-
munerative scheme. The employee will not give his best
efforts so long as added exertions do not bring immediate
returns. The only tangible encouragement a man has in the
time system is that his rate of pay will be increased from
time to time as he demonstrates his worth. In a large shop
it is impossible for a foreman to be in such intimate contact
with all the men that he can make wage adjustments that
will be strictly fair to each individual. It is hard to measure
the efficiency of a man by his general attitude or by his talk.
Some of the best talkers and apparently most industrious
workers may be confirmed loafers and the least efficient men
in the firm's employ.

The only practicable way of establishing a satisfactory
time-rate system is to divide the men into groups or classes
and fix a maximum and minimum rate for these classes. If
a man is valuable he may get his wages raised to the maxi-
mum within the class, or he may be advanced to another
class. The wages are fixed by bargain between the men and
the employer. This bargaining may be done either collec-
tively at the dictation of a labor union, which fixes mini-
mum wage rates, or it n^y be done by the individual work-
men fixing their wages with the foreman. At best, the wage
adjustment is largely guesswork so far as rewarding individ-
ual men for what they do.

Unless there is some means of measuring what a man
does, it is unsafe to depend upon personal likes and dislikes.
Here lies the inherent weakness of the time-rate system. A
foreman will often raise wages not because a man actually
produces more, but because he thinks the man more efficient.
Managers in plants have long appreciated the fact that there
should be a different method of fixing standards of wage
payment than on the basis of personal conjecture.

The average man is not inclined to overexertion. Fre-
quently his chief aim seems to be to do the least amount of

216 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

work necessary to keep from getting discharged or being re-
duced in pay. Foremen are much annoyed and firms lose
thousands of dollars through the idleness of men from one
cause or another. A great deal of this lack of energy on the
part of the men is not due to wilful idleness but to oversight
on the part of the foremen. Men will frequently get a job
completed and wait with perfect complacency until the fore-
man comes to them with another task. In some poorly run
shops men waste as much as half a day waiting for the fore-
man to find out that they are ready for a new job. There are
also other kinds of time losses. Men will frequently wilfully
kill time in order to make work last. Machines will not be
run to their maximum capacity because to do so will finish a
job so long before quitting time that it will be necessary to
lift off the piece and adjust another about the time the whistle
blows. One will sometimes see men in day-rate shops actu-
ally make their machines run without doing anything at all
in order to appear to be working and so do away with the ne-
cessity of changing a job at some inconvenient time. Man-
agers of plants are not ignorant of these conditions. The
wilful dishonesty and lack of willing cooperation on the part
of the employees have made the daily wage system a poor
means of remuneration for many kinds of work. Wide-awake
men rightly reason that if a scheme could be devised by
which workmen lose money for idle time, they would not be
so inclined to sit with bovine patience until their foreman
finds them out of work and starts them on another task,
neither would they be apt to waste time wilfully in order to
start new work at a more convenient season or to save a job
when work is getting low in the shop.

It is rational to assume that the remuneration for labor
should be on the basis of all ordinary commercial transac-
tions, that the man should be paid for what he does, that
compensation should be by the piece-rate system. There can
be no morei effective way to prevecj idleness, because the

i46
235

195

180

165

X ISO

\J5

J20

105

»o

•5

1 1 /

RECE RATE PLAN

TIME" RAT5 PLAN — — -

■/S

4-A

f\'

\^%

QE«

:f^ >1

OUR

.--^

/AG

r c

PE)

^ P

\ecc p

R-^

tr f

;£«

Piece

D.
75 VI

60 U
0

45
30

Z 3 4 5 e 7 a

*-^— Pieces PER Hoo»^- — •
Fig. 24.— Comparison of the Time-Rate and Piece-Rate Systems.

218 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

idler is fully as much a loser as the firm. Viewed from the
workman's standpoint, there can be no more profitable means
of remuneration. Fig. 24, on lines BB^ shows that on the
piece-rate system of wage payment a man automatically
raises his hourly rate by increasing the output. The firm
apparentl}'' does not gain directly from the increased effort,
as is shown by the fact that the wage cost per piece is a con-
stant quantity. (See lines B' B', Fig. 24. ) From the dia-
gram one would conclude that the piece-rate system of wage
payment would be a system strongly advocated by the work-
man. The opponents of the piece-rate system are not the
employers, but the men. Their opposition is based upon
good reason, and yet, from the employer's point of view, it
is ahnost impossible to eliminate the objection. To fix piece
rates one must be guided by the capabilities of the em-
ployees. When managers introduce the scheme they try to
be fair to the men and estimate the time it will take to per-
form certain tasks on the basis of previous time records made
by men employed on the day-rate system. These records are
from the very nature of the case inaccurate, and it is found
invariably that nearly every one underestimates the work-
man's efficiency when he has an incentive so great as that
offered by the piece-rate system. In some cases the output
of the workman will increase seven and eight times his esti-
mated maximum.

Under these conditions the manufacturer finds he is often
paying extravagant prices for labor which is either unskilled
or semi-skilled in type. In these competitive days, he can-
not afford to pay exorbitant daily wages to men whose train-
ing is of a low order, because his competitors will soon adopt
a daily wage or a piece-rate schedule of a very much lower
wage standard. The result is that the piece-rate system of
wage payment in industries, which have not been thoroughly
standardized and developed, has been found exceedingly un-
satisfactory, because the workmen consider it unfair to cut

THE PAYMENT OF THE WORKMAN 219

their rates, and the managers find it ahnost impossible to
establish a rating which will be satisfactory to themselves
and to the employees without considerable adjustment.

The breakdown of the piece-rate system is due to the fact
that it is impossible to adjust rates without friction. The
men consider every reduction of the piece rate an illustration
of the employers' greed, while the employers feel that the in-
creased output is another example of how grossly employees
have deceived them in the past in order to mislead them into
paying excessive wages. Both sides feel disgruntled.

Employers who have experimented with this system and
have discovered the skill a laborer possesses, have endeavored
to apply the theory of giving a large incentive to some one
who can guide and direct the men and yet pay these workers
a day rate. There are plants in this country Avhich apply
this scheme, and call it the Contract System. The foremen
in charge are given a certain price for the work they do, they
hire and direct the men, usually paying them on a day basis,
and fixing their wages at the lowest possible point the men
will agree to take. Under the contract system of working,
the foremen have their income based upon the work they can
get from these men. The scheme has a tendency to develop
a body of alert overseers who are always after the men to see
that they are not wasting time either through laziness or by
incompetence. The system when it operates makes men
work, but it has the unpleasant disadvantage of developing
slave-driving habits. Many men will not stand for such
treatment; and unless the work is of such a nature that a
rather low type of worker can be employed and taught the
tasks to be done, the company is liable to have a great deal
of trouble with its labor under this contract system, although
in some plants it has worked successfully for many years.

Mr. Henry R. To^\Tie, a number of years ago, conceived a
scheme which has had a profound influence upon pay sys-
tems, because he introduced an incentive rather than a coer-

220 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

cive process to get men to increase their exertions.* His
Bcheme is briefly this — find out what has been the average
cost for a given amount of output in the best year before he
introduced the system. \\'ith this as a unit he determines
what the labor cost for the same quantity has been for each
succeeding year. The difference in labor cost between the
two gives him the savings made for the fimi by the extra
effort of the labor force. This saving he distributes in the
following way: 50 per cent is retained by the firm, 10 i>qy
cent is given to the foremen in charge of the work as an
inducement to them to get men to increase output, 40 per
cent he distributes to the gang bosses and workmen through-
out the j)lant on the basis of their annual wages. The re-
muneration is given at the end of the year or at the end of
some considerable length of time shorter than a year.

This sharing of the gain with the men has in it a num-
ber of defects, the most important of which are :

1. The reward is remote.

2. The method of division is not likely to encourage great
activity because the men do not receive shares in proportion
to their individual efforts.

Some writers have criticised the system, because it makes
the men share gains which they say may be due to improved
methods of work or to better management. There may be
some basis for this statement, but Mr. Towne's paper dis-
tinctly stipulates that the books shall be so kept that any
improvements in management will not be shared by the
workmen save in so far as they actively assist in the work.
The paper specifically notes that it is only fair to share with
the operatives the savings which their activity makes for th<^
firm.

The remoteness of the reward and the method of division

^ Transactions American Society of Mechanical Engineers, Vol.
X, p. 600, No. 341, "Gain Sharing," by Henry R. Towne.

THE PAYMENT OF THE WORKMAN 221

are, however, serious objections, and these Mr. F. A. Halsey
circumvented when he presented the premium plan of remu-
nerating labor.' Mr. Halsey believed with Mr. Towne that
the workman should be rewarded only in so far as his actions
lower production costs. He, however, appreciates the fact
that a much better incentive will be given to men if they are
paid at once their exact share of all the profit they make.
His scheme is briefly this :

A man is given a certain rate per hour. A piece of work
is assigned to him which will be allowed a certain number of
hours time in which to l^e done. If the man performs the
work in a shorter time, .he will be given a fixed percentage of
the value of the time saved. This extra sum w411 be paid to
him as a premium to his wages, and on that account the
Halsey scheme is called the Premium Plan of Kemunerating
Labor. The idea of the scheme is to establish the shop on a
piece-rate system, in which the men will be guaranteed a
certain daily wage. If the management has fixed the price
of the unit of work performed at too high a figure the work-
man will share his extra productive value with the manufac-
turer in a manner that will not require the cutting of the
rate. In a word, by dividing the gains due to his extra pro-
ductivity, both the manufacturer and the worker profit, and
the worker will have no reason to limit his output because
there will be no rate cutting.

The lines AA, Fig. 25, show how by this system a man
increases his hourly wage in a very material way by increas-
ing his productivity. At the same time he cuts the unit
price per piece considerably for the firm. (See lines A' A',
Fig. 25.) The figure shows just how Mr. Halsey manages
to make unnecessary any cuts in the unit rate. By his sys-'

^ Transactions American Society of Mechanical Engineers, Vol.
XII, p. 755, "Premium Plan. of Paying for Labor," by F. A,
Halsey.

222 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

tern, the workman by increasing his wages actually cuts the
cost of production. His only method of obtaining a big
reward is to cut the unit cost. Thus the employer has a
decided advantage. If we look at the other term of the con-
tract we find that the workman is guaranteed a standard daily
wage, so that he can feel that he is not on the piece-rate sys-

ISO

I3S

>lALSEr PREMIUM PLAN

O i Z \3 A S & 7 S 9 to

Fig. 25.— Comparison of Halsey and Rowan Premium Plans.

tem. If the price per unit has been set too low, he is not
compelled to overexert himself in order to make a fair daily
wage.

The advantages of the Halsey system are :

1. The men are encouraged to produce more by being
rewarded in proportion to what they do.

THE PAYMENT OF THE WORKMAN 223

2. The reward is immediate and substantial.

3. The employer, in sharing the gains of the extra exer-
tion on the part of the worker, does not have the necessity of
cutting the rate in an arbitrary manner, hence the workman's
mind is relieved of tlie fear of having his wages reduced
arbitrarily.

A British modification of the system was put into opera-
tion by David Rowan & Company. Mr. Rowan's wage
curve is plotted B B an the same diagram (Fig. 25), which
shows Mr. Halsey's premium plan, while the Rowan piece
cost is shown as line B' B' on. the same diagram. Accord-
ing to Mr. Rowan's idea, if a job has been allotted too much
time, even with the Halsey system, a man may get a remu-
neration out of all proportion to the value of the work. For
example, if a man should be allotted one hour to do a piece
of work worth 30 cents, and if he should increase his pro-
ductivity ten times, with the Halsey system he would get
$1.20 an hour. This is considerably better for the firm than
his hourly rate would be with straight piece work. The lat-
ter cost would be $3 an hour. (See Fig. 25.) Mr. Rowan
believes, however, that even Mr. Halsey's scheme is too
extravagant in its reward, so he devised a plan of so adjust-
ing the premium that every increase in wages should be equal
to the percentage the operator saves on the time. For ex-
ample, if a job is allotted one hundred hours and the man's
rate is 30 cents per hour, the cost of the work would be $30.
If he does the job in ninety hours, with his hour rate 30
cents, the time wages on the job would be $27. He has
saved, however, 10 per cent of the time, and gets a 10-per-
cent increase in wages on the actual time cost. Should he
do the work in eighty hours, the time rate would be $24.
Twenty per cent time saved on $24, the time cost, would be
$4.80. A comparison of the two tables will show the wage
scale (wages rate 30 cents per hour) as worked out by the
Halsey and the Rowan methods.
16

224 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

COMPARISON OF DIFFERENT METHODS OF CALCU-
LATING PREMIUMS.!

Halsey's Method.

Hours
Allowed.

Hours
Taken.

(Time Wages
on Job.

Premium
Earned
on Job.

Total Labor
Cost.

Workman's

Rate per

Hour.

100

$30.00

$0.00

$30.00

$0.30

100

27.00

1.00

28.00

.311

100

24.00

2.00

26.00

.325

100

21.00

3.00

24.00

.343

100

18.00

4.00

22.00

.366

100

15.00

5.00

20.00

.40

100

12.00

6.00

18.00

.45

100

9.00

7.00

16.00

.533

100

6.00

8.00

14.00

.70

100

3.00

9.00

12.00

1.20

100

.30

9.90

10.20

Rowan's Method.

Hours
Allowed.

Hours
Taken.

Time Wages
on Job.

Premium
Earned
on Job.

Total Labor

Cost.

Workman's

Rate per

Hour.

100

$30.00

$0.00

$30.00

$0.30

100

27.00

2.70

29.70

.33

100

24.00

4.80

28.80

.36

100

21.00

6.30

27.30

.39

100

18.00

7.20

25.20

.42

100

15.00

7.50

22.50

.45

100

12.00

7.20

19.20

.48

100

9.00

6.30

15.30

.51

100

6.00

4.80

10.80

.54

100

3.00

2.70

5.70

.57

100

.30

.297

.597

The reader will observe that while the Rowan plan com-
pared with the Halsey method does prevent excessive earn-
ings on the part of the employee when he multiplies his
output many times, it on the other hand gives a decidedly

1 "Trade Unionism and Labor Problems," by John R. Com-
mons, p. 287.

THE PAYMENT OF THE WORKMAN 225

greater reward to the workman until he more than doubles
his productive capacity. Is this a desirable characteristic
of a wage system? Does not the Kowan Premium tend to
encourage the workmen to remain at a lower level of effici-
ency than the Halsey Premium? To be perfectly fair to Mr.
Rowan, it should be stated that his rate is adjusted for the
purpose of making special cuts unnecessary. If a man loiters
about his work when the rate is being set, he cannot reap too
great a harvest by "rushing." The scheme certainly does
act automatically in reducing output cost, but it seems highly
probable to the writer that men who work under it would be
somewhat inclined to "nurse" their jobs when they found
that their added exertions increased their wages so slightly
as the system does in the later stages.

In 1895, Mr. Fred W. Taylor read a paper before the
American Society of Mechanical Engineers, in which he
recognized the advantages of the Halsey system and its su- *
periority over any previously proposed scheme, but pointed
out that it has one very grave defect — while it encourages the
workman to do good work, it gives only a passive incentive
by not punishing him for not doing his best. In other
words, the Halsey system permits men to gather premium
for work done, but it does not necessarily stimulate a man
to produce his utmost. In order to introduce this element,
Mr. Taylor proposed a scheme of wage payment which both
punishes and rewards, and which he calls the differential
piece-rate system. According- to this plan, a man is rewarded
only after he attains a certain fixed standard of work. If he
does not accomplish the job in a given time, instead of being
paid an ordinary piece-rate price, he is paid a piece-rate
price considerably lower than the one paid if he does the
work within the stipulated period.

If the usual output of a 30-cent-an-hour man in an ordi-
nary shop is one piece in an hour, Mr. Taylor would by his
timing process find that an individual working at his maxi-

226 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

mum rate on every part of the job could accomplish three
pieces in an hour. He would then fix his rate as follows:
Three pieces in an hour would be made the standard. If a
man could perform three pieces an hour he would get, not as
he would get in the day-rate shop, thirty cents an hour, or
ten cents a piece, but fifteen cents a piece, or some similar
amount, for each piece performed, so that his hourly rate, if

ISO

135

IZO

*> 60

J>\

'jI

.^.

.^'

>^T

pff

? pi

&<=E

•

or
6o a.

Fig. 26.— Taylor Differential Piece-Rate System.

he reached three pieces in an hour, would be forty-five cents.
If he performed more than three pieces in an hour, say four
or five, he would still get 15 cents a piece for every one per-
formed, so that the workman, as shown by Fig. 26, would
raise his wages by a fixed amount for every piece finished.
If, however, he could not make three pieces within the allot-
ted time, he would not get 15 cents a piece, or even 10 cents
a piece. He may be given but 8 cents for every piece made

THE PAYMENT OF THE WORKMAN 227

below three pieces. With such a scheme one can easily see
that it is very important indeed, from the workman's point
of view, to perform a large amount of work in a day.

This plan of reward differs from any of the others in
another essential, aside from the differential piece-rate idea,
viz. : The time allowed to do the job is very accurately deter-
mined. The superintendents of the works make a careful
study of the exact time it needs to take to do the jobs, work-
ing in the quickest kno^\Ti way, and the workmen are allowed
a period just sufficient to permit them to perform the task in
the most approved fashion in which it can be done. Thus
there are two ideas involved in Mr. Taylor's differential
piece-rate system: (1) a punishment for one who does not
perform the task, and a reward for the one who does, which
is the method of pa}Tiient idea; and (2) the workman has
accurately determined for him by his superiors the time it
should take to do the work. In a sul^sequent paper entitled
"Shop Management,"^ Mr. Taylor discusses in detail his
method of ascertaining the time it should take a workman
to perform his task. Every job is divided into its elemen-
tary operations; and an attendant, by means of a stopwatch,
observes the time in minutes and seconds it takes a good
workman to perform each part. The total time of the job is
then fixed by adding together the time it takes to accomplish
all of these elementary steps. With the time thus deter-
mined, a task is given which will keep a good man busy in
performing, and yet which is within his possibilities. Mr.
Taylor emphasizes the idea that the task must be so hard
that only a first-class man can perform it. He gives high
wages and secures a low labor cost by accurately determining
the maximum possible output of a workman, and compelling
him to reach that standard. He utilizes the hitherto unre-

^ Transactions American Society of Mechanical Engineers^ Vol.
XXIV, pp. 1337-1480.

228 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT
I

alized possibilities of the laborer by learning what those pos-
sibilities are, and giving the reward only if they are attained.

The Halsey system, as criticised by Mr. Taylor, is defec-
tive, because it does not give the workman a definite goal to
reach, hence the high wage paid does not reduce the output
cost as it should.

In the American Engineer and Railroad Journal for
February and December, 1906, there appeared two articles

tso

»5

A^5

Fig. 27.

.<e

pvec«

.<****

g^l^

M/a4C cost p'\r pi

>Toff owHH >—»» grg seT

«T +hree piec?s i»er rtr.

/J^

J. ,t 3 -^ 5 * "^ 8 9 »0

— PIECES PER HOUR ^

-Emerson Differential Piece-Rate System.

descriptive of the Santa Fe's shop-management scheme. The
first article is entitled, ' ' Shop Betterment and the Industrial
Method of Profit Sharing, ' ' by Harrington Emerson. The
second article is entitled, "Betterment Work on the Santa
Fe, " wT-itten by the staff writers of the Journal. These two
articles have been the source of much comment, and of arti-
cles in other magazines. Mr. Emerson has devised a piece-

THE PAYMENT OF THE WORKMAN 229

rate system, which in many respects is analogous to the Tay-
lor plan. He determines from previous shop records, and
by a careful study of the best possible ways of performing
the work, how long it should take to do each task as it comes
into the shop. His scheme of remuneration is, however,
different from Mr. Taylor's as regards the basis of payment.
After determming the minimum time it takes to perform a
task, a man is paid a fixed daily rate of say 80 cents an hour
until he perfonus t^v'o thirds of the standard task. If he
performs the standard task, or 100 per cent, which in our
illustration would be three pieces in the hour, he is given an
extra reward of one fifth of the regular wages for the opera-
tion. If he performs more than two thirds of the work, but
less than the standard, he is likewise paid a gradually in-
creasing bonus, as sho^mi by curv^e A A on Fig. 27. If the
workman can perform more than three pieces in an hour, he
is paid the high price per piece for every piece he makes
over the standard. The Emerson system differs from that of
Mr. Taylor in one respect. It is not a piece-rate system un-
til the man performs at least two thirds of the standard task.
Between the Halsey system and the differential piece-rate
system, as developed by Messrs. Taylor and Emerson, there
is another plan proposed by Mr. H. L. Gantt, called the
"Bonus System for Rewarding Labor. "^ Mr. Gantt 's scheme
differs from the differential system in that it is not a piece-
rate system, yet it is like the Taylor system, in that it does
set a definite task for the person to perform. If the individ-
ual performs the task within the given time, he is paid his
regular hourly rate and a certain stipulated bonus. E very-
job is allotted a certain amount of time; if the man performs
the task within this time, he is given the bonus, and as soon
as he finishes one job he is given another, to which he is like-

^ Transactions American Society of Mech(:i,nicQ,l En^ineers^ Vol.
XXIII. 1902, p. 341,

230 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

wise allotted a definite amount of time. The result is that if
a man in the course of a day doubles his output, he will get
a day's wage plus the bonuses, which are attached to the
separate jobs he has performed. If he fails to do the work
within the allotted time, he gets only his day's wage.

As a matter of fact, it makes very little difference which
system of wage pajmient is used. There is no reason why
the Halsey system need be a "drifting" system, as termed
by Taylor. The thing that makes the differential piece-rate
system effective is that the manager of the shop determines
the time that should be taken to do the work, and fixes his
differential rate accordingly. Should the manager of the
plant, where the premium system is applied, take the same
means to determine the minimum working time, the premium
system could be adjusted equally well. There are shops which
have tried both the premium and the differential piece-rate
systems; and, after giving both a fair trial extending over
many months, found the premium plan considerably more
satisfactory. On the other hand, there are shops which have
ultimately decided upon the differential piece-rate system.
Indeed, the method of pajmient is not so important, if the
concern can find a scheme that will justly determine the
possibilities of a worker. The system of wage payment for
this purpose is a secondar}'- matter. The method of obtain-
ing the possible speed at which a worker can produce is the
real problem of management, and the real object of all wage-
pa}mient systems should be to reward him in such a manner
that he will produce this maximum.

Mr. Taylor suggests his unit-time study method to obtain
the speed possibilities of the man; Mr. Halsey gets his data
by studying shop records and carefully observing the men.
Both schemes have produced good results under different con-
ditions. Generally speaking, the unit-time study system is
successful in shops which handle contracts of a more or less
unvarying character^ and are not compelled to follow exact-

THE PAYMENT OF THE WORKMAN 231

ing requirements. In one shop of a miscellaneous t}^e which
handled work that had to be exceedingly accurate, the unit-
time study system^ after a fair trial extending over many
months, proved a most dismal failure. When men tried to
make the calculated time, they spoiled the work. In another
shop it has proven successful, yet the same man who made
it a success in the one shop, failed to make it a success in
the other, and he had the cooperation of the management in
both cases. The cause of the failure in the one shop was the
exacting type of the work, and in the other the success was
due to the rather crude character of the output.

In the shop where the differential system failed the pre-
mium system was next tried, the time being predetermined
by previous shop records, and by keeping after the men; and
the scheme was successful, the very scheme which Mr. Tay-
lor so severely condemns.

In his paper, Mr. Taylor emphasizes one thing which
should not be passed over without some comment. He does
not advocate the paying of high wages so much as he urges
the paying of wages which are considered high by the aver-
age workman of the grade he employs. His plan is to teach
a low-grade man to do work which would othen\'ise be given
to a highly skilled man. "The writer" (Mr. Taylor) "goes
so far as to say that almost any job that is repeated over and
over again, however great skill and dexterity it may require,
providing there is enough of it to occupy a man throughout
a considerable part of the year, should be done by a trained
laborer and not by a mechanic. A man with only the intel-
ligence of an average laborer can be taught to do the most
difficult and delicate work if it is repeated often enough,
and his lower mental caliber renders him more fit than the
mechanic to stand the monotony of repetition."^

1 Transactions American Society of Mechanical Engineers, VoL
XXIV, p. 1347.

232 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

Care must be taken not to cslttcj that policy too far.
There are concerns in this country employing this means to
have their work performed. One plant has advertisements
in papers every once in a while for men. They employ a
high-salaried man, who is nominally in charge of a large de-
partment, but whose work is delegated to an assistant. The
chief of this department spends so much time getting people
that he is not in touch with the work as he should be. He
gets men at a low price, and just about the time they are
trained they leave. The plant is in a state of unrest and
irritation at all times, due to the fact that about one third
of the working force is always just learning, and is making
mistakes that cause the gang bosses and foremen to be
blamed for not looking after the men. These, in turn, vent
their spleen on the man who ignorantly makes mistakes.
This concern, however, looks with pride upon its average
wage rate per man, and fully believes that it is carrj^ing out
a sound labor policy. On the contrary, the low average per
man being paid for work regarded elsewhere as safe only in
the hands of skilled men is costing the firm dearly in spoiled
work.

In order to determine the best way to carry on a plant,
one should not be guided by any set of opinions or by any
one system. The manager should know the men's records,
the amount of material that is used and wasted, the amount
of defective products returned by purchasers, and the per-
formances of the machinery. These are the things which his
shop accounting system should tell, as the following chapters
will explain.

CHAPTER XVI
RECORD OF THE WORKERS

If the management establishes a fair wage scale, it can
enforce the performance of good work by discharging incom-
petent workers, because well-paid men want to do good work
in order to hold their jobs. If the wage scale is unfairly low
the workmen will be able to find better, or at least as good,
employment elsewhere, so that discharge is no threat to com-
pel good work under these conditions. Assuming a fair
wage scale, how can the management enforce the performance
of accurate work? Obviously, there is but one way, and
that is to punish the workmen who turn out poor work.
Good management dictates more than a policy of finding out
what each man does. To have good work turned out as a
matter of course, is the goal for which all concerns should
strive, and this can be done only by getting rid of the poor
men and by seeing that no incompetent men are re-employed.
To keep good men, rewards must be given either by promo-
tion or advances in wages from time to time. To reward the
right employees, there must be an accurate record kept of the
men from the time they enter the plant until they leave it.

For a small shop, a foreman can be secured who may be
entrusted with determining the efficiency of the employees,
because if he is in the habit of being easily deceived by in-
competent assistants, the defect soon manifests itself to the
management. In large plants, however, good foremen are
frequently embarrassed by poor workmen; and, many times,
poor workmen, after being discharged from one department,
find employment in other departments until their delinquen.

233

234 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

cies are again discovered. If insufficient record is kept of
their service in the plant, they may, after a time, be re-em-
ployed in the department in which they first demonstrated
their inefficiency, and even under the original foreman.

No ordinary person, having under his constant guidance
three hundred to four hundred men, can keep in mind all
past employees. It is not hard to discharge a man if he dis-
plays inefficiency, but by the time he has proven his inca-
pacity, the firm loses money, and the man himself is being
done an unkindness by being given even passive encourage-
ment to work in a field for which he is unfitted. It is better
for him to be compelled to discover a place where he will
be sei-viceable, or to find an occupation more suited to his
ability.

Some few years ago, there was a plant which did not believe
in keeping records of its employees. The foreman hired
men whenever he needed help. In one instance, an em-
ployee was caught idling and was discharged. He lost half
a day, was re-employed in another department the next morn-
ing, and at the end of the week, in spite of the lost time, he
received more money for the same work than he would have
had with his old job under the other foreman. The second
time he "soldiered" as much if not more than the time
before, but was circumspect enough to be employed very
assiduously whenever the officials approached his vicinity.

Another organization transferred men from one depart-
ment to another without ever recording such changes in the
main office. A vacancy once occurred in a department where-
in a man desired to be located, and he asked permission to
change. The boss signified his consent by saying, "All
right, I'U send your time to the main office. " A week later
the pay envelope showed that the man was paid for working
in two departments at the same time. To cap the climax,
when he reported the overpay, he was reprimanded by his
former boss, who said, ' ' You might have kept quiet and not

RECORD OF THE WORKERS 235

have gotten me into trouble. It didn't do you any good to
squeal." And it surely did not, for the man was now com-
pelled to wait two weeks for his next week's wage, the pay-
master remarking that it took so much time to make the
correction.

In order to make the foreman responsible for good work,
both in quality and in quantity, the manager should take
pains to supply him with eflicient men, and to do this he
should have a working scheme that will keep proper record
of the employees. In a large concern, this can be done to
best advantage by establishing a labor bureau. A small con-
cern can safely let the time department keep a card- index
record of the men.

The problem of the labor-employing bureau may be
divided into several parts:

1. To select and employ the proper laborers for different
duties.

2. To keep record of the employees who are still em-
ployed, with their status as workers.

3. To keep record of all people who have been employed
at any time with reasons for their dismissal and their record
as employees.

The best basis for good judgment is accurate knowledge.
If an employer secures accurate knowledge of an applicant
for a place before he hires him, he can save himself much
trouble and some expense. There are several things a manu-
facturer should know at once about an employee.

1. Has he any constitutional weaknesses or injuries?

2. His approximate age.

3. His educational qualifications.

4. His experience.

The first three can be gotten pretty accurately by combin-
ing answers on the part of the applicant with personal obser-
vation. The fourth one is not so easily determined by asking
questions, especially if the applicant is inclined to be un-

236 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

truthful. Many men apply for jobs for which they are unfit-
ted or have had a very meager preparation. In one shop an
ex-weaver secured a position as a steamfitter by merely
stating to the hiring clerk a lot of hypothetical experience.
As a matter of fact the young man did not know the differ-
ence between a pipe-wrench and a pipe-cutter, but he held
the job for six months before he made too many blunders.

The safest way to determine a man's experience is to
have him state the names of his former employers and people
to whom one can be referred who can tell about his efficiency
and conduct from actual experimental knowledge.

Considerable thought should be put upon the framing of
the questions on the application blank. For instance, in
asking for the practical experience the applicant should be
requested to state the trade or occupation learned, the length
of time in service, and what was done while in service. In
this way the applicant will give definite information con-
cerning his work and will not have a chance to branch off
into meaningless generalities. Every question should be so
framed that the answer to it must be brief and give definite
information about one thing.

Some firms require the ajDplicant to state age, whether
married or single, whether he'uses drugs, liquor, or tobacco,
whether he belongs to a union or not, whether he is a citizen
of the country, if he knows anyone in the plant, why he left
his former place, the number of people depending on his
wages, whether he speaks English" and can read and write,
what wages he expects, what he previously earned, does he
look for further advancement, why he wants to be employed
by that particular plant, and sometimes even other questions.
One large concern asks no less than forty questions of every
prospective employee. When one goes to that extent he is
getting data which even if truthfully given would be unnec-
essary for any but the most unusual conditions. The data,
however, caftuot be depended upon after it is obtained-

RECORD OF THE WORKERS 287

Men, especially those in middle life, are very apt to misstate
their ages. Several years ago a large concern determined to
find out the ages of all of its employees, both those who had
been long in service and those who were just being engaged.
In hardly any case did the men state their exact age. The
younger men overstated their age from one to five years, and
the older men understated their age five years and more. In
one case a man of more than sixty years told the clerk, ' ' I
am forty-three, and if you come around thirty years from
now I'll still be forty-three."

Men resent questions of an inquisitorial nature. They
rarely object to stating whether married or single; but when
asked why they want to be employed in the plant or whether
they expect any advances in wages, they feel they are being
asked what a workman once called ' ' fool questions an3rway. ' '

Much more information can be obtained about the man
by looking up references. Some firms make it a point to
send out blank forms to previous employers of an applicant
whom they contemplate hiring. Others look up the refer-
ences of every man who applies, so that they will have a
trustworthy list of available candidates. The letter seeking
information about the employee should be framed in such a
way that the former employer can answer very briefly and
definitely questions which will give one a very good idea of
the capabilities and personality of a man. One form of a
letter of this character is shown below.

Dear Sir:

has applied for a place as

and has given your name as reference. Will you kindly answer

the following- questions regarding , and if there is

any other information relating to him which is of interest, we
shall be indebted to you for it.

1. How long was the above man employed by you?

2. In what capacity?

3. What was his rate per hour?

4. What advances did he get, if any?

238 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

5. Is he a good mechanic?

6. Are his habits good?

7. Is he regnlar in attendance and industrious?

8. Why did he leave? ."

Any information you give us will be treated as strictly confi-
dential, and we shall be glad to answer requests of a similar nature
regarding men who give our name as reference.

Very truly yours,

This letter embodies questions which can be accurately
answered with little trouble on the part of the individual
who receives it. Some officials object to telling the public
or business rivals what wages they pay their workmen. If
experience shows that firms are unwilling to state the wages
they have paid to past employees it is well to omit the ques-
tion, and in fact all questions which they believe another
company would not care to answer. The reason for leaving
out such questions is that if there are too many objection-
able requests there is a strong probability of the letter being
ignored.

After one has obtained full information concerning the
man, the next step is to keep a record of him as a worker.
No recording scheme is of value unless it records actions as
well as opinions. By this is meant that one of the most un-
safe bases for judgment of a man's ability is what some
individual thinks of him, unless the estimate is supported
by evidence which shows the basis for the opinion.

The scheme which keeps record of the employees should
do two things. In the first place, it should keep accurate
record of what each person is doing so as to enable the fore-
man and other officials to place the men to the best advan-
tage in the plant, and in the second place it should make
it impossible for men to be put on the pay-roll who are not
doing the work they are expected to do, or who may not be
in existence at all. /

RECORD OP THE WORKERS

A good employee must at least:

1. Be regular in his attendance, prompt in his appear-
ance at starting, and faithful in his stay in the plant.

2. He must be diligent while within the plant.

3. He must be efficient.

It was shown in the previous chapter how the plan of wage
payment develops the diligence and efficiency of the em-
ployee, but no matter what the wage scheme is, unless it has
back of it some recording device to keep track of what a per-
son is doing, it is impossible to gather data for the establish-
ment of a good wage system, or to determine the cost of the
article; and it is likewise impossible for the management to
ascertain who are the good and who are the poor employees.
A man is a good man for the firm if his average record is
good, and a poor man for the firm if his average record is
poor. The basis for determining his standing should be,
"What has he done?"

Foremen are very apt to make wrong estimates of men,
because they do not know their averages of efficiency. For
example, in one place there is a bright, capable man who
has on numerous occasions, in face of considerable difficulty,
erected engines. His work has always been done with few
men, and these not of the best, yet he has not made a
serious mistake in the erecting of several engines. There is
another man who on two separate occasions was likewise
given some engines to erect. On these two occasions it hap-
pened, through laxity on the part of the shop management,
that he was able to borrow men from other gang bosses, and
the engines he had to erect were of such a nature that he
could use nearly all the temporary bolts and other material
which the other gang boss had been compelled to collect in
order to erect some previous machines. The first man's in-
genuity in gathering material enabled the second man to take
advantage of these conditions, and in addition he used some
\aborers who were not properly charged to the job. In the

240 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

course of the erection he made a great many mistakes, had
holes drilled in the wrong places, which made it necessary
to have them tapped out and filled with plugs, he did nearly
twice as much actual work in getting the cylinders and hous-
ings in the proper place, and his work all through was de-
cidedly that of an amateur. Nevertheless his engines were
done in a week's less time than were the other man's. He
had established for himself a record in the plant, and when
there was an opening for advancement he was given prece-
dence over his rival. Workmen in the humbler positions
are sometimes compelled to submit to such conditions. The
foremen do not mean to be unjust. They cannot be alto-
gether blamed for advancing the wrong man, when that per-
son makes a spectacular showing. In the case above cited,
if there had been exact time records kept of all the time ex-
pended on each engine, there would have been a considerable
showing in favor of the first man who did not get the reward.

There is nothing so fatal to the discipline of a plant nor
so disastrous to its smooth and profitable working as to have
a body of men irregular in their appearance, who come late
and go out at odd times.

Efficiency is, to a great extent, a matter of faithfulness;
and, if a firm insists upon regular and prompt appearance,
it is paving the way for good work. There is only one way
to stop irregularity — make it unjDrofitable. If a firm weeds
out the non-dependable individuals, it will, before long, de-
velop a good working organization. To weed out these un-
desirables one should have an accurate record of the entering
and leaving time of all the workers in the concern.

One of the most effective devices of time recording, and
the one first adopted, is the time check. This is used in a
variety of forms.

1. The in-board out-board form. At the entrance of the
works are placed two boards, one marked "out-board,"
placed near the gate, and the other marked "in-board."

RECORD OF THE WORKERS 241

placed farther toward the work rooms. Every man is as-
signed a numbered check, which hangs with the correspond-
ing number on one or the other board according as he is in
or out of the works. While the men are filing in, taking
their checks off the out-board and hanging them on the in-
board, a watchman stands near by to see that no one takes
other than his own check. The gate is closed as soon as the
signal for starting work is given, so that no one can get to
his check after starting time without calling the timekeeper's
attention to the fact.

2. A modification of the above scheme is to give the men
actual possession of th6 check, which they drop in a box on
entering the works. Obtaining the time record by either
method is a simple matter. After the plant is started, all the
checks are in, and the timekeeper makes a record of the num-
bers. In the second plan he takes the checks into the work-
rooms and returns them to the men. In this way he comes
into actual contact with each workman, so that there is no
possible means by which one man can drop another's check
into the box without being detected.

3. The third plan dispenses with the check. The work-
man is given a number, which he must announce as he en-
ters a specified gate. A clerk at the entrance crosses off the
number as the employee calls it out. With this scheme, it
is impossible for a man to give more than one number, and
the clerk has an immediate record of the men who are in the
plant.

4. While these schemes are effective for plants of mod-
erate size, or where the work-rooms are close to the entrance,
they fail to be thoroughly satisfactory when the departments
become scattered over a large area. Unless there be some
kind of a check on the men after they enter the main gate,
those disposed to shirk will take advantage of the opportu-
nity to waste time in getting to their places after they have
recorded their entrance, To prevent these losses the large

242 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

firms have been forced to adopt some plan which would re-
cord the employee's entrance into the department in which
he is due. A check plan of surmounting the difficulty is to
have a clerk distribute the checks at some main entrance,
and then require each man to hang his check upon a board
within the department in which he is working. This scheme
proves effective in insuring the prompt appearance of the
men in their departments, but it involves more clerical work
than is necessary, because it requires a set of clerks at the
entrance gates as well as another set who make record of the
checks as they are hung in the departments. In order to
reduce clerical work to a minimum and at the same time
record the time accurately, mechanical devices have been
perfected.

5. The recording clock. The greatest improvement that
has been made in timekeej)ing devices is the introduction of
the recording time-clock. There are a number of styles and
varieties on the market, but all aim to :

1. Enable the employee to record his own time of enter-
ing and leaving the plant, thus preventing errors on the part
of timekeepers.

2. Enable the timekeeper to compute readily the number
of hours each employee has to his credit, thus saving clerical
work in making up the pay-rolls.

3. Prevent employees from entering the departments after
starting time and leaving before quitting time.

These clocks are often used in connection with a shop
cost system, and have proven very satisfactoiy. (See Fig. 28. )

According to this scheme a card is made out once every
week or two weeks for each man. The man gets a num-
bered card, which is placed in the rack "out" before he
enters the plant. When he goes to his department he inserts
the card into the slot^, depresses the knob B, which records
his time of entering. The card is then placed on the "in"
rack. When he leaves the plant he takes the card from the

RECORD OF THE WORKERS

243

'4n" rack, goes through a similar process, and records his
leaving time, after which he places it in the "out" rack.
This card at the end of the week, two weeks, or half month,
records the total number of hours he was within the plant,
and all latenesses or irregular leaving are stamped in red
ink, thus calling attention at once to his delinquencies. At

By courtesy of Internationa^ Time Recording Co., Endicott, N. Y.

Fig. 28.— Recording Clock with Cost Equipment. Each clock can
conveniently keep record of two hundred people.

the end of every day, the timekeeper enters the daily hours
in the total column, so that at the end of the period the
cards can readily be made up and each man given his wages
from the record. In many cases the back of the card is used
as a check, so that the payment is made by merely having the
paymaster and foreman sign and countersign the back of it.
In any case, the cards for each man are kept and filed under
his name, thus giving a truthful record of his regularity as a
worker, truthful because it shows him by his own actions
and not by a report of opinions.

244 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The recording clocks help in making out the pay-rolls,
and in keeping accurate record of the men passing in and
out of the plant; but if the time scheme does only this, the
firm has a very poor system. Good accounting demands that
no plan is complete unless it can be verified automatically
from independent sources. Moreover, one should know not
only that a man has been present during a certain period,
but also that he was an efficient worker while he was present.
His efficiency can be determined by knowing what he has
done with the time recorded on his time card.

Several schemes may be cited by which a record is kept
of a man's actions while within the plant.

1. Send a timekeejDer around every day to get from the
workmen the time they expend on each job or contract.

2. Have the man list on a card his tasks from the begin-
ning to the end of the day.

8. Have the man record on separate slips of paper for
each contract the hours he spent on each particular job.

4. Have the office attach to each job, or piece of material,
a tag on which the workman records his name or number
and the time for his operation.

5. Have a multiple part tag attached by the office, so
made that as each operation is completed, the workman tears
off a portion on which is stated his operation, number, and
time elapsed.

6. Have the office make out a slip for each operation to
be performed on every piece of work for every contract. In
this case the man is allotted the work, and the time is
stamped when he is given the paper. When he returns it,
it is again stamped, and the elapsed hours and minutes will
show his time on the job. Another slip is immediately given
him, so that he has mapped out for him his entire work.

In the first scheme, the timekeeper is sent around to enter
in a book the time each man spends on each contract. (See
Fig. 29. ) The time allotted to each contract may be quite

o
o

PQ
<v

S46 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

inaccurate, especially if the shop has several contracts or
different classes of orders. In one plant where this scheme
was in operation, the men would give the wildest kind of
guesses as to the time they spent on each Job. Their only
care was to see that the amounts they apportioned around
equalled the total time they spent within the plant. Coupled
with its inaccuracy, such a plan entails an unnecessary
amount of clerical labor; because the time of each contract
must be summarized on an analysis sheet (see Fig. 80) be-

/v ff-

/Ji"

32,2.-^ 1 /^/X*-

J^ Z.O'^

S-m* 1 S- i^9'-

.*v«-

\r>x.

]^U 1 M^

r-u.

Wvo^

iTcd

(/■lU 1 />Ai.

l/ojL

/•^l

{(0

iS 1

^$ /

(

iJ>-

I'/

i-S

—

err.

X Contract numbers.

Fig. 30.— Daily Analysis Sheet showing Method of Distributing

Time.

fore it can be finally allotted to the individual contracts.
(See Fig. 32. ) This labor has been reduced to a very great
extent, however, by having the time-book ruled in columns
for each contract, and by inserting in their respective col-
umns the time that the workmen expended. The footings of
these columns equal the time expended on the different con-
tracts by the end of the week. However, in places where the
shop has a great many contracts the time-book increases to
such large proportions, and the ruling becomes so elaborate
that the columnar books become cumbersome and expensive.
The second scheme of having the men list their tasks on
a card (see Fig. 31) was introduced for the purpose of mak-
ing the men more careful in apportioning their time, the
9<SBumption being that if they could record, theii: time as they

RECORD OF THE WORKERS

247

completed each job they would find it just as easy to be ac-
curate as to be inaccurate in distributing their labor by con-
tracts. The scheme is weak in that it is almost impossible
to make men record their hours as they complete their tasks.
In about eight cases out of ten the men have their pencils
and cards securely locked in their tool boxes during the time
they are working. Toward the end of the day they make out

OAIU>^ TIME

DIS-)

NAM

-RiaUTION TfCKCT

-^//

OP'CffATIOf^

NOLff^S

n^TC

\/AI.UB.

SZ.S^

^1 a:^:;c\Z^ cf_

'2p

.G.S

G2.J

<r^

/.to

i-iX,0

.£,r

//O—

—

/L..Q a

Tor^u ^A--/?0

W^'Le-^r^

&AN9 BO»i

Size 3'

Fig.

X 5*.

31.

their time, apportioning the hours very largely according to
their fancy. The result of this scheme is that it is no more
accurate than the first, nor does it save clerical labor, because
the cards must be sorted by contracts and then totaled on
separate contract sheets (see Fig. 82) before they can be re-
capitulated. In one respect, the card system does save time.
It dispenses with the services of the timekeeper, who goes
around quizzing the men.

In the third scheme, the man makes out a separate slip of
paper for each contract on which he works. (See Fig. 33.)
Here thq tipfle is not apportiocied any more accwately to thq

K-

t??

■^^

—J

" 1

*
?

■r

k
o

fe^

^ tl

^^ 4

^ c

k
u

UJ
0:

kj
i

CONTRACT H

(

^
N

i^i

— J

RECORD OF THE WORKERS 249

contracts. The men, as a rule, do not make any more effort
to be exact in their statements because of these contract
slips. The pads of slips, like the cards, are either locked in
the tool boxes or are in the hands of gang bosses, who give
them to the men at the end of the day. The separate slip
system, however, has the advantage of saving the clerks the
trouble of resorting the papers to charge properly the time
to the contracts. With this scheme, the total time for each

MACHINE SHOP

workman's _ « A^ - /T? ^ ^

NUMBER ,J-22--NAME>^^ (^<vgww

optRA-rioNs ryi^i.t6t**'^

Rat r S^ V^l»,cM^\ roREMAN

Size 3" X 5".

Fig. 33. —Individual Contract Time Slip.

contract each day can be obtained at once by one sorting,
and then by listing on the adding machine the time cost of
the various operations.

The fourth method. There are two ways in which the tag
can be used, viz., not as a production" order, or as a produc-
tion order. According to the first scheme, as the workman
gives the piece to the next person in line he puts on the tag
(Fig. 34) his number and the number of hours he worked,
stating the operations which he performed. This scheme
tends to make the man more accurate in his statements be-
cause the tag is always with the job, and must be filled out

250 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

before being handed to the next worker. It saves labor for
the clerks in analyzing the time by contracts, because each
tag stands for one contract only, and the total time on the
tag represents the total direct labor cost of the contract up to
the last operation performed. The scheme does not, however,

isi N

P«seri|p4-;oo o* Wo^Jt \

fAt-vt

waxK

noun

o»Te 1

opeiMTiow

Fig. 34. — This tag is not detachable. It shows
the length of time and wage cost of each
operation. By sorting these tags by work-
man's number one can check the correctness
of the recording clock or time book.

necessarily make the men more accurate, if they desire to
deceive; because with a number of contracts on their hands
at the same time, some being worked upon and some await-
ing their efforts, the men, especially if they are working
under a premium plan or any kind of j^iece-rate scheme, will
be tempted to allot time in such a way that the contracts do

RECORD OF THE WORKERS 251

not really get charged with their proper shares of time. For
instance, in one place men were paid a certain price for
reaming out holes on a certain class of work. They were
paid another price for reaming under other conditions. It
happened that the time allotted for the first job was so very
generous that in spite of the fact that the second one was
actually unfair, the men never complained because both kinds
of holes invariably went together, and instead of stating the
exact time it took to do each class of holes they understated
their actual time where they had the meager allowance, and
overstated it where they had the generous one. In the long
run they obtained unusually high wages, and the cost was
exceedingly unfairly distributed on the work.

The multiple part tag used as a production order is ar-
ranged as in Fig. 35. Every piece of work must go through
a certain number of steps or processes. If the work is stan-
dardized, regularly printed tags may be attached to each piece
of material, as, for example, in a stocking factory. If the
shop manufactures things which vary, the multiple part tag
may be printed in blank and the steps filled in on the blank
as they are performed. When a man performs his j)art of the
task, he merely tears off the step which he performed, and
then affixes his number with the hours worked. In this way
the time department receives a record by contract, and like-
wise by men by first arranging all the slips l^y contracts, and
summarizing them on the contract sheet (see Fig. 32) , and
then rearranging them by men and carrying the wages to
each man's personal account. This form of tag is very good
for continuous process industries or for work of a machine
order. When, however, it is a question of the erecting of
engines where several people work on the job at once, and
where it takes some time to finish the job, the tags do not fill
all the requirements, because it is difficult to enter more than
one man's number on a space. For work of such a character
a good scheme is to put the task un^er the immediate control

£52 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

of a gang boss who will be held responsible for carr}'^ing out
the details. It is well in connection with this plan to use
Scheme No. 6, wherein the workman secures from the time
clerk a slip of paper indicating the task his gang boss gave
him and the time when he began it. As soon as he completes

(

191 1

ea*mu>t"r no . ,,,.

p«»:rip+K)«>of ^arrt.

9hippin<^ In

Prl'tt>, •* !«»<.pt«»n+ „, _ . 1

TKACT

HO.

;5%

NO.

Opt RATIONS

■nwc
L«rT

HOUfH

<4n» B*CKiNe

ncxpiNft

OPErvmr<&

UOO«>lfv4*

i^EAyiMG

RlBbER

Fig. 35.— Tag detachable along dotted lines. It
serves as a production order, besides show-
ing time of each operation.

the task he should be required to return the paper to the
clerk, who will stamp the time returned, and the elapsed
period of duration will show the length of time it took to
perform the work. (See Fig. 36.)

In this way, the gang boss need not keep the time nor be
held responsible for its keeping. The workman cannot ap-
portion the hours as he fancies, because he can start no task

RECORD OF THE WORKERS

253

without his order slip, on which must be stamped, as he gets
it, the time he received it.

In order to use any of these devices to determine the
efficiency of the men it is necessary to make a record of the
men. Two schemes may be used. If the work is paid on
the piece basis, one of the best records of a man's efficiency
is the amount of wages he draws. This record can be kept
in a wage-record book (Fig. 37), where the names of all the
men in each class are grouped, or an output record may be

machine: shop

.191

Workman's No.

OPERATION

Contract No-

Tirne Storted

Time Returned Elapsed Time

For Co»t Clei-W Only
Rate.

Otr-ec+ Labor.
Toi-a I

Fig. 36. — Individual Operation Time Slip for each Contract.

made on a separate monthly memorandum output card.
(See Fig. 38.)

If, however, the man is paid on the day plan, it is neces-
sary to standardize the tasks and compare workmen who do
similar classes of work. If it is hard to standardize the
tasks, as it is in the erecting of large machines, the gang
bosses in charge of the erection may be charged with their
labor costs (see Fig. 32) , and comparative records made with
other men who have worked, or are working, on similar con-

RECORD OF THE WORKERS

255

tracts. The gang boss can be held responsible for too high
a cost; and if an exact and definite record is kept, he can at
once be notified when his costs are running high, and be
asked to give the reasons for it. If there is any complaint
to make against any particular men, the foreman can shift
the men reported delinquent to other gang bosses; and if
through several trials the labor costs increase with these
workmen, proper means can then be taken to improve the
labor force. This method of comparison, sometimes termed
the deadly parallel, does away with elaborate records and
obviates the necessity of marking systems for the individual

•»• yfi

K^han^ea ►*

atatv

MOUTH

OUTPUT

ecoD

SPOILED

S/VILCD

MOMTM

ouTPtrr

GOOD

3«J/i«

SPOILED

Fig. 38. — Monthly Memorandum Card showing Efficiency of Piece

Worker.

men. Some firms adopt a system of grades and marks based
upon an estimate more or less accurate of what each man
does, and the number of mistakes he makes. While this
scheme may have some advantages, it is, for industrial en-
terprises, cumbersome and expensive to keep up, and it is
really less satisfactory than the report system above outlined.
Of course, in connection with the scheme suggested, there is
an individual card kept for the workman or foreman ; and if
he is responsible for any destruction of material or breakage
of tools it is recorded against him. (See Fig. 88.)

A good way to know accurately of a man's spoiled work
and mistakes is to have a spoiled work slip made out for his
work as it is spoiled. (See Fig. 39.) This should be signed
by the workman and the inspector with the reasons for the

256 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

rejection and the slip filed as an original record. At the end
of the month the slips can be summarized, and a record made
on his individual report card. (See Fig. 38.) These indi-
vidual cards soon indicate to the foremen the inefficient
subordinates, who should gradually be weeded out of their
departments, and deserving ones promoted as opportunity
occurs. Every time a change is made in relation to any

SPOILED WORK TICKET

DEPARTMENT

WORKMAM3 NO MACHINE NO.

ARTlCL-e NO. DEFECTIVE.

NATURE £>»' •DErECT -

CAUSE ^___^_^-^__^^__— ___— ^— — — ^—

INSPECTOR

To be filled ira by Co3+ Clei-k on\y

Value of- +ime o-f

Workman _^__^_____

Volue of work done, on To+al

eocb unit +o date ____^_____ L.oss

SIZ£ 3kS

Fig. 39.

man's position, it should be entered on his permanent file
card. (See Fig. 40. ) At the end of each year the general
average of the man, as shown by his output record (Fig. 38),
should be entered on the back of his Permanent Record Card
filed in the Employment Bureau's office. (See Fig. 40.)
This last card should not be destroyed, unless the employee
is known to be dead. While he is retained in the plant, it
should be filed in one drawer, and when he is released it
should be taken out of the employed file and entered in the
unemployed file, so that whenever a man seeks reemployment
he can be at once investigated. Some firms obviate the ne-

^""

■^^

"™*

"^"

St^

>»

to ^
1 ?

->x ^

10 ^ &^
ki '^

•

5 ^

fit

n
C

li:

-1 (T

?: k

fV-

0.
Q

^ O "" uj

-Q

■^ ^ o ^

^ 0 ^ ? £ ?^ 5 ^
"T -S ^ 5^ ly V 5

5 . • "M < k .^ ^

^V»

N ^

RECORD OF THE WORKERS

259

cessity of copying the workman's record twice by combining
the essential features of the two cards shown in Figs. 88 and
40, and filing them in the foreman's or manager's office
while the men are engaged; and in event of discharge or
quitting they are sent to the employment office. In this way
the employment office has on file only the former employees,
while the managers keep in touch with the present help.
This method of handling cards has its advantages and dis-

M Sm

COST OF- DETECTS DUE DCPTS F-QF^
MONTHS OF YEAR /9f

JAN.

F£B.

MAI^

AP/i

ftAY

June

JULY

AUS

ajTPT

OCT.

NO^

«ec.

<j So

,-»*

^» «

-'■'

.--'*'

"*«,

^ ■»

..-

--.

■*■».

* v«

^-^^

,''

.j:;^-

--''

♦ ♦ ♦ ♦

MOtiTHS

Depi No. I — —
Dcpt A/aZ ***■*
P&pf No. 3 -

Fig. 42.— Chart of Errors showing Monthly Efficiencies of
Departments.

advantages. It is cheaper in cards, filing space, and copy-
ing, but the cards are apt to become soiled, torn, mislaid,
and even permanently lost in the general handling and pas-
sage between departments. If the employment office retains
its copy at all times, then the loss of the output card in the
shop is not so serious as it is when only one card is kept.

While the manager should have a record of the efficiency
of each man in the plant, that is not sufficient. He should
know just how much each department wastes and loses, and
what have been the causes for all losses. A foreman's effi-
ciency is determined by his ability to prevent men from
wasting time and spoiling material.

*»

fe
5

-■^i'

=^'2

^ ^
- ^

ni^

«"»■>■

O ^

-■"t

ft. 5:

i'l

ii^

Q ^

-i

<0 ^8

r
Pi

•)

^ Y .^

. V

a
o

RECORD OF THE WORKERS 261

Two plans of recording defects can be used, either sum-
marize the errors in tables (see Fig. 41), or make a chart of
the defects chargeable to each department according to their
number or cost, or both number and cost. (See Fig. 42.)
To make the charts involves but slightly added expense above
the cost of tabulation, because the information must be tabu-
lated before it can be charted. The added advantage, how-
ever, is worth more than the increased cost; because a chart
shows, at a glance, tendencies over periods of months, while
the table compares for only one month at a time.

If a manager keeps these general comparative records,
and if, in addition, he has a detailed record of why the
losses occurred in each department (see Fig. 43), he can
intelligently criticise the work of his lieutenants and can
make changes which will be improvements and not mere
"shake-ups."

CHAPTER XVII

RECORD OF RAW MATERIALS

In the process of manufacturing goods, two classes of
material are used, direct and indirect materials. The direct
are those which go into the manufacturing of a product, and
stay with it when it is in its marketable form. The indirect
are goods used in the process of manufacturing, but which
never become a part of the product. In making a desk, for
instance, lumber, nails, varnish, rotten stone, sand paper,
polishing cloth, and other materials are used. The lumber,
nails, and locks are part of the desk when finished; while the
rotten stone, sand paper, and polishing cloths though neces-
sary in order to put a beautiful finish on the desk, do not
appear as part of it when ready for the consumer.

In making an engine it is necessary to use iron, steel,
brass, and other metals, and also molds, oilS; waste, and
other materials which are quite as necessary as are the steel,
iron, and brass, although they appear nowhere in the make-
up of the engine.

Good management insists upon two things regarding raw
materials :

1. The greatest care possible should be exercised in pre-
venting waste and losses on direct material.

2. The greatest possible economy to prevent undue expen-
ditures for the indirect materials.

To secure maximum economy in materials it is necessary
to:

1. Purchase them from the lowest-priced firms whea
^oods axe at their lowest prices.

RECORD OF RAW MATERIALS 263

2. See that the material comes up to the contracted
standard of excellence in quality.

3. See that the quantity purchased is obtained.

4. See that the goods are delivered at the specified time.

5. See that they are properly housed and stored.

6. See that there is no unnecessary waste in the plant.

7. See that no losses can occur, except through waste.

In order to accomplish these seven ends it is necessary to
have a complete record of the most reasonable supply firms,
to know the best time to purchase goods, and to have an
exact checking system.

1. To attain the first aim, the purchasing department
should be in constant touch with the market from which the
raw materials are obtained. In small concerns, some mem-
ber should gather information as to the causes that influence
the prices of raw materials. He should find out the seasons
when they are cheapest, should know the prices of the vari-
ous usable qualities, and keep himself informed as to weather
conditions, crop failures, and other causes likely to affect
prices. The firm should also take advantage of the market,
e.g., if a cotton manufacturer finds that he can purchase his
cotton most advantageously during a certain month in the
year, he should arrange his finances so that he can acquire
his cotton at that time, but he should probably not purchase
an entire year's stock of raw material during a single month
or so, and then pay storage on his purchased goods and
interest on the money Uised to secure them.

Most companies have a regular purchasing agent or pur-
chasing department to look after securing supplies. In some
concerns, a very strict account is kept of the price quotations
for every day in the year; and in some cases, the price
changes are charted on squared paper, and curves are plotted
showing price movements for each day of the year. For
most lines of material, and for all ordinary businesses, such
9, scheme is mmecessary. Some goods have higher prices

264 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

during some seasons than others, and the management of the
plant should endeavor to buy during the favorable time, al-
though if he must borrow funds, the price he pays for his
goods will be the market price plus interest, as well as stor-
age and insurance.

2. Quite as important as purchasing the material at the
right time and at the lowest possible price is to have some
scheme by which one can be certain of purchasing the most
useful quality of material. The common plan is for the pur-
chasing department to establish standards for all of the ma-
terials to be purchased, and then have all goods tested before
acceptance. Many large concerns have well-equipped labora-
tories that establish standards and test all purchased materials
in order to see that they fulfil the terms of the specifications.
In many branches of work it is not only desirable to make a
preliminary test of the material, but also to keep track of the
material while it is going through the plant, and to test the
finished product of which it becomes a part. This is espe-
cially important for plants having no special department
for testing materials and such goods as are hard to stand-
ardize.

It is not difficult to keep track of materials. A continu-
ous industry plant, which manufactures several styles and
grades of some textile material, can keep record of the raw
material which goes into the various lots of goods by num-
bering the lots and recording specifically the material charged
to these lots. Whoever buys the finished product will have
the lot number recorded against his name. If the finished
product from this raw material should turn out to be bad, or
to be unsatisfactory to the customers either in wearing qual-
ities or in other respects, they will report to the manufactu-
rer who is able to tell, by turning to the Index Record (Fig,
44), which shows the customer's name and lot number,
what raw goods proved to be unsatisfactory, and, as he
keeps a record of his purchases;^ he is able to tell from

—

•n

—

•)

' „ '

■ ■

•)

(<3

tf2

■

«^

-i.

«-

•

"«0

1^
.1'

^ s t

6
S

266 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

whom he bought the unsatisfactory raw material. (See Fig.
45.)

To illustrate the records needed for an assembling in-
dustry an automobile plant may be selected. The parts of
an automobile are purchased from widely different sources.
If the product should prove unsatisfactory, the manager will
hear specific complaints in the form of objections about some
particular parts of the machine. If the defect is real, in-
vestigation will soon show whether it is due to faulty ma-
terial or to workmanship, and if proper records are kept of
the source of the former, it is not hard to discover where the
fault lies. The fact that the material is bought from widely
different sources does not offer any serious objection, because
the firm, as a rule, buys the same parts from a very limited
number of firms, e.g., the engines and engine parts will come
from one or two firms, and their products have characteristics
which soon betray their origin.

8. See that the quantity purchased is obtained. One of
the most fruitful causes of losses in large concerns which do
not have a good receiving system is shortness in weight or
amount due either to mistakes or open dishonesty on the
part of their employees and others. In order to see that the
firm gets all the goods for which it pays, the usual plan is to
establish a store-room and to let the order go through the
following routine: Have the purchasing department make
out the items in triplicate on a special blank, sending one
copy to the firm from which they order, one to the receiving
department, and retaining one on their own files. When the
consignment arrives, the man in the store-room should be
compelled to take his copy of the order, compare it with the
invoice, and then check the actual items of the invoice
against the goods received, sign the two slips, and send them
u}) to the purchasing department, where they are checked
against the purchasing department's copy, and approved.
The invoice will be sent to the accounting department, which

—"

■*■

•>

■

«:

Si-

- »

» 5

•0

vfl

?!?

Jfi

<rj

c
C

f .

i >

«»

k»5

,*"'

^^?

__j

—1

—J

~~^

268 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

will select the paying day and credit the firm for the amount,
while the other slip will be returned to the store-room, where
it will be kept on file. The store-room records should be
kept in the fonu of some kind of perpetual inventory.

A perpetual inventory is a record which shows at once
the amount and value or the amount or value of goods on
hand at any time. (See Fig. 46. ) To have these perpetual
inventories correct, there must be kept for each class of goods :

(a) A statement of all the goods received.

(b) A statement of all goods issued.

The accuracy of the book inventory is tested from time to
time by an actual counting and valuing of the stock on
hand, and a comparison of the results obtained by this
means with the balances shown on the books.

There are two methods of keeping an inventory. One is,
to have all the material arranged in bins and racks, and to
have in front of every bin and rack a card or tag on which is
placed the amounts of materials received, with dates and the
amounts taken out with their dates. Two bins are often used
to simplify the keeping track of the material, one bin being
used to receive goods while they are being taken from the
other. When the delivering bin is emptied, it is used to
receive material, while the now emptied one becomes the re-
ceiving bin. The double bin idea is good, if there is suffi-
cient space available in the stock-room, because it lessens
the accumulation of shop-worn stock.

The record tag, however, is objectionable from two stand-
points. In the first place, the tags are so widely distributed
that it is inconvenient to see just how the stock stands, as
shown by the records.' It is inadvisable to remove the tags
from the bins in order to ascertain the situation, because in
the meantime someone may withdraw things; and, having
no slip on which to enter withdrawals, fails to make any rec-
ord, with a consequent inaccuracy in the records. It also

to
-J

•>

«5

^1 (:

«i 8

-I

"go

XT '•J O

b
i

5 ^ ^

hf^

■

.^^ CD

Id T}<

270 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

frequently happens that the amounts are put down on the
slips carelessly, and sometimes even by unauthorized per-
sons. Of course, this latter difficulty could be overcome by
not giving access to the store-rooms to anyone who has not
proper authority, or who is not responsible for goods.

An inventoiy without these objections is a book ruled
somewhat according to the form of Fig. 46. The book is
put in charge of a storekeeper or a clerk, and no irrespon-
sible person is permitted to take anything from the store-
room. Everything received is entered in the book from
the invoices, and everything given out must have a properly
written requisition. Both the purchasing agent's authority
checked against the invoices, and the requisitions are kept
until the books are audited. The difference between these
two shows the book balance, and should always be repre-
sented by the actual amount of goods on hand in the stock-
room. The balance can be verified by inspection; and if,
for any reason, there is a discrepancy, an investigation is in
order.

^ 4. ^Vhile a firm may lose much on the value of the goods
purchased if it does not have a well-planned receiving de-
partment, it may lose the profit of an entire contract if the
raw material does not arrive in time for use when wanted.
In order to get material delivered in time, the purchasing
department should be notified long enough in advance to be
able to anticipate all needs. With an inventory ledger of the
type shown in Fig. 46, the storekeeper has little difficulty
in keeping the purchasing department informed as to when
it should go into the market for more goods. Whenever the
storekeeper finds his balance to be below the minimum limit,
he must at once report the approaching deficiency, thus giv-
ing the buyer ample time to replenish the stock. The pur-
chasing agent should see that the minimum limit is set suffi-
ciently high so that the store-room will never be completely
out of anything that may be needed. The usual practice ia

RECORD OP RAW MATERIALS 271

bo liave the storekeeper fill out a blank, telling the kind of
stock needed and the maximum and minimum amounts car-
ried. These reports are made out in duplicate, one for the
information of the purchasing department, and one to be
retained by the storekeeper for his own protection. The
maximum point for the stock is fixed in order to prevent
overbuying.

5. After adequate provision has been made for receiving
goods and reporting deficiencies in deliveries and lowness in
stock, there arises the problem of the care of the material.
Losses in material may be from three sources :

(a) Bad storage, which causes actual deterioration in the
goods.

(b) Storage which makes it possible for unauthorized
people to have access to the store-room, and to steal or pilfer
materials.

If goods are properly stored, the first and second of these
difficulties will be reduced to a minimum. If judgment is
exercised in storing material, it will be found unnecessary to
exercise the same precautions over all materials. It is un-
necessary in a machine shop to store the rough castings with
the same care that one should exercise in storing heavy ma-
chinery, and no one would exercise the same care in storing
heavy machinery that he would exhibit in storing more valu-
able articles, like brass ware, oil cups, electric-light bulbs,
and various other similar supplies. The latter stock should
be kept strictly under control, and it should be impossible
for one to get any of these things without proj)er authority,
unless by actually breaking into some room or compartment.

While rough castings may very frequently be stored out in
the open, it is inadvisable to do so unless absolutely neces-
sary. There is an instance of a concern which had made
several expensive castings of hollow wheel segments and
arms, wljiit it stored in the open in such a way that the hoi-

272 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

low arms were turned upwards. In the course of a severe
winter, which had many changes in temperature, the arms
became filled with water which froze solid, and split them
beyond all possibility of repair, entailing a complete loss to
the company. Had the foreman in charge taken the precau-
tion to cover the openings with boards, it would have pre-
vented the water from getting in at all.

There are certain fabric goods, such as raw wool, cotton,
and yam, which must be kept from the weather, and yet
which are of such a nature that there is no necessity for tak-
ing special precautions to prevent petty thieving. Workmen
have little use for these things in small quantities, because
they cannot sell small lots to advantage; and, it is hard for
them to dispose of large amounts, because they usually have
to establish relations with people who will dispose of such
materials for them. Silk, however, must be very carefully
watched because of its value.

The material on hand should be studied with reference to
the liability of pilfering. The storage-rooms should be so
arranged with shelving and racks that the material is at all
times easily accessible for inventory, and is at the same time
kept from contact with vermin, overheat, dampness, or any-
thing that will hasten the deterioration of the goods.

Besides arranging the goods so as to be available, safe
from the weather and secure from theft, the storekeepers
should so arrange the material that it can be found by a
comparative stranger. There are two methods of doing this.
One is to arrango the materials according to some alpha-
betical plan, as for example putting all brass work, bolts,
buckets, brooms, etc., in one section; the next section fol-
lowing with articles beginning with C, and so on. For a
small shop, where the variety of goods is not large, this
scheme is sufficient. If, however, the amount of stores ia
large, or the variety extensive, of which some are being called
for constantly while others are not so much in demand it in

RECORD OF RAW MATERIALS 273

wise economy for the storekeeper to put the former material
close at hand, and the less used in the more remote places.
When this scheme is adopted, the best plan is to number the
bins in some well-recognized order, and to have an index
book, which lists all the material according to name, size,
and quality or other relations, and states, opposite the de-
scription, the number of the bin or section in which the
listed material is to be found. Such a scheme saves much
space in storing, and the goods are convenient to find and
easy to handle.

6 and 7. After the goods have been properly stored, care
must be taken to prevent loss of material by unnecessary
waste and theft. Both ends can be accomplished by the same
method, provided precautions are taken to keep everything
under the absolute control of the storekeeper, and to hold
him responsible for the proper issuance of goods.

A complete record of materials taken from a store-room
may be kept in two ways. One is the s^oucher or requisition
plan, by which the person receives the goods upon the presen-
tation of a properly authorized voucher. The other scheme,
the budget system, does not permit the issuance of materials
on vouchers. The two plans require explanation.

Formerly foremen and workmen found all supplies open
to them for the mere asking. Many shops and mills at the
present time may be found wherein the workmen need only
to make an oral request, and stock will be given out without
further ceremony. In such plants, the storekeeper attempts
to make a record by charging the value of the material to the
contract on which the workman says he is employed. The
scheme is so loose that men frequently obtain many things
which they do not use for their work at all. In one instance
there were men working on some things which were exceed-
ingly grimy and oily. Their hands became ingrained with
the dirt. A happy accident revealed to them that the grime
could readily be removed by the application of lard oil.

274 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

At some time every day, while they worked on that job, the
storekeeper issued to each man about a half pint of the oil,
presumably for the contract, but which they actually used to
clean their hands. At that time lard oil of that quality cost
about $1 a gallon.

No one who has tried the plan of unrestricted issues has
found it satisfactory where the raw products possess any ex-
changeable or usable value, outside of the shop. Losses in

\NORKS RELQUISITION ON STORE ROOM

.191

"Tht mafmrial lisiicl belo»v and chartfe '^
CONTRACT NO.

OUAN'T/Ty

DESCRl PT ION

* far cosf cterlr only

APPf^OVtO

rOREMAN

Size 3" X 5"

Fig. 47.

stores were found to be inevitable, and it became customary
to give out stores only to workmen having authority from
the foreman in charge of the department, or from some other
authorized agent. In order to carry out this scheme, shop
accountants devised the plan of putting in the hands of
the foremen regularly printed requisitions ruled much like
Fig. 47.

A workman desiring anything for his job, applies to the
foreman or his clerk, who fills out a blank, stating the ma-
terial, with the amount which he wants given to the man, and

RECORD OF RAW MATERIALS 275

then signs the slip. The storekeeper with this authority
issues the requested goods. In small shops, where the fore-
man has comparatively few things to look after, this scheme
can be used with excellent results. Men will not call for
goods or supplies which they do not need, since the foreman,
being held responsible for all goods given out over his signa-
ture, is not likely to authorize the order without good reason.
When, however, a shop becomes large, the foremen are apt
merely to sign their initials in approval of requisitions made
out by the men. There are shops which use the requisition
system with very poor results. In one plant where this
scheme was in operation, the men were building some ma-
chinery which required the use of candles. One or two of
the workmen found after a few trials that the foreman gave
his approval without trying to remember whether the mate-
rials had been duplicated in a previous voucher, and without
giving much attention to the items in the list. The O.K.
mark was given in a perfunctory way, thus the workmen
could get the goods by going through a mere formality.
Two men every day made a regular practice of getting some
"lalf dozen candles each, which they put in their dinner pails
and took home. Others obtained brass by the same method,
others incandescent lamps, and the storekeeper, who would
ordinarily have been able to check these losses, was unable
to do so because there were, on an average, several hundred
requisitions daily. It kept all the store's clerks busy deliv-
ering the amounts authorized without, doing anything more,
even had they felt so inclined.

In a large shop it is asking too much of the foreman to
expect him to look after such leaks. His main work should
be to see that the men are supplied with the equipment to do
the work, that everybody is being properly employed, and
that the work is going along with the least possible friction.
If he is asked to do anything else, these important matters
must suffer. The storekeeper can hardly be asked to pass a

276 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

judicial decision as to whether or not a man should have the
supplies called for on a properly authorized voucher. If he
is expected to go back of the voucher, then it is he and not
the foreman who really has the authority to issue goods.
This would entail endless friction and needless waste of time,
and would cost more than the saving would be worth. The
fault is not with the men, but with the system.

Since the requisition system fails in checking losses, a
number of shops have sought for some other device. The
requisition system would have succeeded had it been possible
to prevent orders being made out for more than the require-
ments of any job; because the storekeeper can be held re-
sponsible for all over-issues, though the foreman cannot.
The problem was to introduce a system that could utilize the
storekeeper's possibilities and obviate the need of depending
upon the foreman.

In order to construct a large engine or electrical generator,
engineers must carefully draw up plans months in advance,
and must show to the utmost detail everything which enters
into the firm's product. In these plants the great losses have
occurred through the requisition system. In textile plants
and continuous industry plants the voucher system has been
very successful in stopping all unnecessary waste and losses.
In other concerns, however, where it has not proven a suc-
cess, the managers can use the very disadvantages of the
work to aid their purpose. In the drawing-room after the
drawings and plans are all completed, clerks go over the draw-
ings and make lists of the material which goes into the fin-
ished product. This must be done in order to let the pur-
chasing department or agent know just what to buy. Copies
of these lists of materials are sent to the foremen of the vari-
ous departments so that they may know what to prepare for
in the forthcoming new work. Someone hit upon the happy
device of having several copies made of the lists of materials.
One of these was given to the storekeeper. The list for each

RECORD OF RAW MATERIALS 277

contract is ruled as in Fig. 48, and is given to the store
clerk with the following instructions: "Issue material to any-
responsible workman who calls for it, provided the goods are
listed on the sheet, but take precautions to get the workman's
number against every amount of goods he takes out. When
the list has all those items checked off, issue no more goods
unless spoiled material is returned, or some satisfactory ex-
planation comes from the foreman over his signature as to
why the extra material is needed."

This is the budget system, and it has a number of advan-
tages.

1. It absolutely prevents stealing, because no one gets
goods unless he is responsible for them.

2. It lessens waste to a remarkable degree, because any
unnecessary calls for material are at once noted, and require
much careful explanation as to why they are required, and
men are not apt to be careless when they find their actions
subjected to such close scrutiny.

3. It inevitably brings scrutiny and questioning when the
loss occurs. A man cannot shift his responsibility.

4. It enables the storekeeper to tell well in advance
just what materials he needs, so he can get ready for the de-
mands.

5. It lessens the accounting, because it eliminates the
handling of the vouchers, their listing and adding at the end
of every day. In fact, the storekeeper can make up his books
days in advance if he so desires.

6. It enables the people in charge to keep close watch on
all material, because by it one can predict what should be
the condition of the stock at any time; and, if it is not in
that condition on the appointed day, explanations must be
made for shortage in stock or for delay in completing the
contract.

To be sure, it has some disadvantages.

X. It cannot be operated successfully unless the a/Jtual

■^

?<t

'V"'

'tif<

«: 5

k 5:

^. .

ib*

^ 5 ^

$ s

-• ^

•)

{

»r

»>

0 ^

* t! t

«j

P T y
s <» *

RECORD OF RAW MATERIALS 279

amounts of material needed for any undertaking can be
closely estimated.

2. In special emergencies it does not work fast enough.

On account of the former defect, shop managers use a
modification of the budget plan to keep a wateh on materials
like oil, waste, and things which cannot be definitely allotted
to jobs. An approved plan in use to prevent extravagance is
to issue to each man a certain amount of these materials
every week, and give him no more until the next distribu-
tion day. One firm adopts the scheme of giving the floor
hands a couple of pounds of waste every Saturday, and per-
mits them to have their oil cans filled on certain scheduled
days. Those who have charge of the machines are given
different allotments, and are permitted to get oil at any time
they desire.

In a shop where large work, made up of many parts, is
being handled, or where there is a great number of regular
orders going through daily, the budget system is without
question the most efficient material record that can be de-
vised. There are conditions, however, when the system be-
comes an annoyance and expense if literally carried out.
Suppose, for an extreme instance, that an urgent repair job
is brought into the shop about Saturday noon, after all the
clerks and draftsmen have left until Monday morning. To
wait until the complete lists of materials are made out for
such a case would be stupid folly, for the plant which needs
the repairs will want to be running by the time the clerks
would ordinarily have the budget ready to send into the shop.

For repairs or special rush orders of any kind, a good
plan to prevent loss of material and at the same time get the
work out in a hurry is to give the foreman or some respon-
sible official in charge of the departments the privilege of
making special requisitions for such emergencies. After the
contingency has been taken care of, the special requisitions
can be assembled and the amount of used material accurately

280 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

determined and priced. If, on comparing the issues and
costs, as shown by these special vouchers with similar repair
jobs or ordinary output, it is found that the issues have
been unusually large, an investigation should be made and
explanations sought. \\Tiile such inquiry does not of course
prevent loss or waste on a contract that has left the shops,
it tells the management who is responsible for losses, and
if the man at fault does not prevent future overissues, he
should be discharged.

These unexpected difficulties are apt to arise at any time,
and no system can be devised to take care of them all in the
ordinary routine, without either delay or friction, or both.
For such instances every system should provide some short
cut, as above outlined. It is under these conditions that the
manager proves his worth. In fact, he is not really capable
of filling his position unless he knows how to make short
cuts at the proper time, and just when he should modify his
standard system, whatever it may be, to take care of unex-
pected events.

CHAPTER XVIII

RECORD OF FINISHED AND UNFINISHED
GOODS

After providing for keeping track of the labor force and
of the raw materials, there still remain the partly finished
goods, the finished goods, and the machinery^, including
equipment. It is necessary to keep track of the partly fin-
ished goods for several reasons:

1. To keep the management informed as to the probable
time when various goods will be ready for delivery.

2. To keep track of the approximate value of the goods
at any time.

3. To determine whether departments are over or under
equipped with men and machinery.

4. To enable the management to determine the value of a
new contract and to localize waste in production.

First, it is necessary to know the approximate time when
deliveries can be made, in order that the company may be
able to satisfy customers as to its ability to deliver goods.

Second, it is highly desirable to know the value of any
goods up to their particular state of completion, because it
enables the management to determine what are the most ex-
pensive steps in the process, and makes it possible to de-
termine in case of fire what his losses have been in partly
finished goods.

Third, it is well to know which are the undermanned and
equipped and overmanned and equipped departments with
relation to each other. One cannot be too careful as to the
way in which money is spent to balance the plant. If a con-
cern does not know its strong and weak points in production,

281

282 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

it is in danger of spending money uselessly or of giving
appropriations to some well-equipped department for further
improvements, which it really does not need and cannot use
because of the condition of the rest of the plant. True econ-
omy does not consist in buying the latest improvements in
machinery unless the whole plant is fully capable of utilizing
the improvement to the best advantage.

Partly finished products give rise to a complicated prob-
lem of accounting. Goods bought at a certain price as raw
material have their value constantly increased by the addi-
tion of labor, power, and of certain costs in the form of over-
head expenses, insurance, reserves for depreciation, interest,
and the like. One day the goods are worth little more than
the raw material. A week later they may be completed. If
a particiilar kind of product is being manufactured, various
amounts of a large order are worth different values at the
same time, because the material is going through in lots, so
that it is not in the same state of completion at any given
period.

From the standpoint of the nature of orders sent into
plants, there are two kinds of manufacturing possible:

1. For a general stock from which the goods are taken as
the sales are reported. Examples of this type are furnished
in the making of hats, shoes, textiles, furniture, pianos, and
almost all ordinary goods consumed in a community.

2. For a specific contract, as illustrated in the produc-
tion of locomotives, large machinery, steamboats, and in
building operations.

If it be desired to keep close watch on all the goods in
the partly finished state with their degrees of completion,
there must be a perpetual inventory or record of unfinished
work. To accomplish this, it is necessary to carry into effect
two ideas that have been found imperative elsewhere for the
attainment of successful management:

1. Divide the plant into departments.

RECORD OF FINISHED AND UNFINISHED GOODS 283

2. Use the production order and have each finished oper-
ation reported by departments to the accounting division.

The departmental method of running an organization
is to divide the establishment into a number of sections.
Each division is under a foreman, who is held responsible
for a certain number of steps in the process of manufacture.

The production order is an instrument, or a series of in-
struments (see Figs. 35 and 36), made out by the central
authority, presenting in written form the instructions to be
followed in various departments of a plant in order to pro-
duce a given commodity. It may or may not be a part of a
voucher or budget system. The production order, in its
strictest sense, only tells what things shall be done; it does
not necessarily keep track of material used. However, wher-
ever a production order plan is used, it almost always com-
bines with it some kind of a material record, and whenever
the budget system is put into operation, it invariably uses
some form of the production order. This instrument follows
the goods through all the departments in the manufacturing
process ; and as they pass from one to the other, the order
can be made the basis for keeping record of the work as it
progresses through the plant. To do this, one need only re-
quire each manufacturing division to notify the accounting
office of the number of production orders received and the
amount of work expended on each order during the day.
This can be done in connection with the material budget and
time-check system, and in fact is usually a part of the time-
record scheme.^ In this way the officials of the concern
have a constant exact record of the value of goods in the
process of manufacture.

The simplest type of plant is one which manufactures a
product like sugar or refined oil. The product comes into
the plant in a bulk that can easily be measured, and is

1 See Chapter XVI.

284 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

passed from one department to the other, either by pumps
or gravity. The quantities can be definitely measured, al-
most if not quite automatically, at the end of each step in the
process by simple registering devices on the tanks, convey-
ing tubes, or receptacles. Nothing need be handled. The
only attention required is to see that the machinery is in

Workman

G FILTERS

TnnU Nn

SUGAR DELIVERED |

Miv4-iiri> Wn

COSTS'

CHAR. PURIFIERS

SWEET WATER

Am+.
Gals.

Spec.
Grav.

Amt.
Gals.

Spoci'fic
Gravity

Labor

Gross

Per lb.

Prod.

Uoprod.

Fixed Chcp.

SUGAR RECEIVED

Amt. on
Hand

Time
Hra.

Special

<3<>l3.

Specific

Grovi+y

Gals.

Sp.G.

To+ol

• For Co«t Clerk ofily

Fig. 49.— Record Slip showing Amount of Goods which passed
through a Department in Bulk.

condition. Of course, there may be wastes in the chemistry
of the process ; but, if these are once revealed by the scientist,
the measuring gauges can be made to show their importance.
In such a plant, the task resolves itself into making a
permanent record of the product of each department, as
shown by the weighing of the solids and the readings of the
registers on the tanks, stills, boilers, and other holders of
the liquids, and the length of time each amount took to pass

RECORD OF FINISHED AND UNFINISHED GOODS 285

through every particular step in the process. If these slips
(see Fig. 49) for each day's work are sent to the cost clerk,
he can add the direct labor cost on each portion of the prod-
uct; and can apportion the percentage that the said depart-
ment carries of the managerial expenses — rent, taxes, interest,
depreciation, repairs, and the like, and thus determine unit
costs. Each department can be required to fill out forms
like Fig. 49, and, at the end of the day, send them to the
cost clerk, who can enter them on a cost ledger sheet, ruled
something like Fig. 50.

In a plant of this character, where nothing is sold except
from general stock, it is desirable to know what has been the
amount of waste in different mixtures, as well as their stage
of completion within the plant. The former can be deter-
mined very readily by making note of the total amount of
the various ingredients of the mixture, and noting at the end
of the process the total amount of the different kinds of fin-
ished products obtained from this mixture. If accurate
ledger record is kept of the material as it passes from one
step of the process to the other, one can tell, by merely look-
ing on this summary page, the amount that has been received,
the amount that has passed through, and the balance on
hand. One can also tell the extent of the loss that has been
entailed in purifying the product to any particular degree.
If, at any time, a new order should come in for a lot of ma-
terial, or if a cargo of new raw material should be delivered,
the manager of the plant can turn to the ledger sheets and
ascertain just what is the condition of the orders under way,
and how soon he can utilize the raw material awaiting his
disposal, or how soon he can deliver any unusual orders.
The ledger can also tell him whether or not one department
is smaller in capacity than it should be to bring about the
best results for the firm. In fact, the ledger, if well kept,
affords just as accurate an inventory of goods in process of
manufacture as of the raw materials.

—

1— 1

—

■"

—

-5
5

to
-J

K K ►«
O u o

t o =
*• N T

1 1 1

Sr^ I

RECORD OF FINISHED AND UNFINISHED GOODS 287

In the manufacture of hats, shoes, furniture, and similar
materials, there is a more difl&eult problem. The product
cannot be measured in bulk, and the time taken to manufac-
ture cannot be recorded for each lot in a group way. The
commodities are made up of pieces which must be handled
as units, and the steps in fabrication are such that each
product must be acted upon separately by the attendant at
each machine.

A good way to keep account of products of this type is to
pass them through the factor)^ in small quantities. Hat fac-
tories, shoe establishments, and textile mills divide their
products into lots which may include pieces of so many
yards, or comprise one, two, three, or more dozens units or
pairs. A production order is written out for each lot of
goods, and two methods may be used to record the exact
condition of the lot in the process.

1. The production order may be arranged in the form
of a tag having detachable slips. (See Fig. 35.) As each
operator finishes his step in the process, he detaches his por-
tion of the tag, and sends it to the accounting department,
where all tags are summarized on a partly finished goods
record sheet for goods which pass through departments in
lots. (See Fig. 51.) To determine what is in each depart-
ment by Fig. 51, one need only note the number of lota
which have been received, but which have not been passed
on to another machine or step. If one of the departments
has received a great number of lots and doe.i not seem to be
delivering them as rapidly as they are turned in to them, the
management can at once search out the reasons, which may
be lack of men, insufficient machinery, or may need more
ability on the part of the foreman to get the work out.

2. According to the other scheme, a tag or slip is made
out for each operation (see Fig. 36) , and every day the forC'
man of each division makes a list of the jobs he finishes and
then gives this record to the accounting department. In tha

rt g

«i

T
si

V5
K

D
U

1
5

■J

D
•J

poay

"oy

ON 4-0-!

Sr-

<u oj

a ja

•n

O 3

^ J=!

O CQ

rt ►

J- -

•♦J •

o t;

■^ ^

o i3

w -

3 '

0) (jj

^ 73

•• 3

73 ^

U O

T^ «

M 5

-u m

<U I-

^^-s

" ^

(Si

&'.i

. Ih

■o o

U «M

o 0

8 0^

■J =<H

O 3

2 c

2i -ij

r
«

^ %

>>-«

^ -S

,»i

rt rt

f^ a

1 <a

^- ja

RECORD OF FINISHED AND UNFINISHED GOODS 289

accounting department these totals may be siimmarized on a
sheet like Fig. 52. This sheet gives the head of the plant a
good idea of what is going on. Some firms use this balance
scheme to very good purpose. A certain large wagon manu-
facturer calls together all of his foremen every day, and has
them list on a big blackboard their receipts from and deliv-
eries to every other department, with their balances on hand.
If any foreman is short of goods or runs below his standard
amount of receipts, he records his deficiencies in red chalk.
If his receipts and balances of goods are unusually large, he
records them in blue chalk. The result is that each foreman
knows what every one else is doing; and the manager of the
\Aant having all the foremen together, can discuss with them
why they are deficient. If anyone is to blame, the difficulty
tan be located at once, and remedied with remarkable lack
of friction. This latter scheme of handling material can be
used very effectively in assembling processes.

This chapter has advocated the use of the production
order form of tag or slip, to gather the time of each contract
on the summary books. (See Figs. 35 and 36.) While this
is in most cases the best scheme to employ in machine shops
and similar plants, these ledgers can be used in connection
with other kinds of time-slips like those illustrated in Figs.
31, 33, and 34, or even with the daily contract time-book
(Fig. 29).

The work of gathering the material on the ledger sheet is
practically the same in each case. A ledger sheet of this
character shows the length of time the work has laeen in each
stage of the process, and gives the management some idea
when it should be finished.

The general question of cost accounting is not under dis-
cussion here, but if records are kept in the manner indicated
by the chapters on keeping track of the labor and keeping
track of the raw material, it requires little or no added ex-
pense to fill in the column shown on these ledger sheets for

■""

1 — ■

•f«

1 —

•J

-fi

.'^

^i3

l4.

-J

-1

if1i;

*?<->

«;

■==

= ■=

-J

tl.

^,0

ci:

1^0

»•

*?*•

1 U

3 iS

(1>

^
^

•u

o
O

,«

fl)

■s

^
^

..■i

RECORD OF FINISHED AND UNFINISHED GOODS 291

determining exact labor and material costs. Indirect ex-
penses and power costs will have to be apportioned from the
general books to the plant's output.

To keep track of the finished product, little need be done.
In ordinary enterprises the shipping department receives all
its finished goods from its own factory. Some businesses
are of such a nature that the product is shipped as soon as it
is completed; but where stock is kept on hand, the keeping
of an inventory is quite as important. The following for-
mula suggests an efficient method of keeping such an inven-
tory:

[Amounts received from factory (both quantity and
value) + Balance already on hand (quantity and value) +
Returns (quantity and value)] — [Sales (quantity and value)
+ Amounts given out, but not sales, as gifts, etc. (quantity
and value)] = Inventory on hand (quantity and value) or
(A + B + R)— (S + G) = L (See Fig. 53.)

To make any inventory thoroughly reliable, an adequate
system of original records should be provided in addition to
a proper summary record in the ledger. A very good plan is
TX) have the shipping department give a receipt for every con-
signment of goods received from the factory. The receipt
should be made out in triplicate, one copy being retained by
the foreman of the factory, one by the shipping department,
and the third sent to the accounting department, to be used
as a basis for the ledger entries, and to be filed away for
reference.

When the shipping department receives goods returned
from dissatisfied customers, or from any other source than
the factory, another form of receipt should be made out in
triplicate, one to be sent to the customer or source from which
return comes, one to be retained by the shipping department,
and one to be sent to the accounting department.

The shipping department should send goods out only on
receipt of an order from the sales department. The sales or-

■"

•K.

•k

* t

°N

-«//o

C/«/WO0

•

J07W/W

ciw^t^

;;

C
U
«

It
o

kj
4

(

■ t

-J

C-)

•

«.
s
-^

•OV

„

to/"C

••

•*

•^

•

■A

r>3Ay *vv

•*

!>:

■^ 5

puBtJuO

o«/ aji*

O
O

o
£

RECORD OF FINISHED AND UNFINISHED GOODS 293

ders should be made out in triplicate, the original to be re-
tained in the sales department, duplicate and triplicate sent
to the shipping clerk. The shipping clerk will fill out the
order so far as possible, checking off all the items he has
been able to deliver. He will file the duplicate for his own
reference, taking care to notify the sales department of any
inability to fill out all the requirements of any order, and
will send the corrected triplicate to the accounting depart-
ment, where it will be used as an original record for the
ledger credits.

Ledgers of this character can be used for every kind of
work. They give the management an accurate statement of
the various kinds of finished product on hand at any time,
and are an aid in determining future policies in manufac-
ture. If goods are not being sold rapidly, the reasons can be
investigated to ascertain whether slow sales are due to laxity
on the part of the sales department, or to inferiority in man-
ufacture. Ordinarily, a large percentage of returns indicates
the latter cause, and a careful investigation will reveal the
true cause of the plant's deficiency.

CHAPTER XIX

RECORD OF EQUIPMENT

The equipment of a plant may be separated into four
divisions :

1. Hand tools and machine attachments used by the
workmen in the course of their work throughout the day.

2. Patterns, templets, and other forms used for special
classes of work or for special occasions.

3. Drawings, records, and plans.

4. The power machinery which makes goods under the
direction of the workmen.

In keeping track of each of these four classes of material,
a different principle is involved. The tools of the first class
are used constantly, and to keep track of them, they must be
put in a place convenient for the workmen. The tools should
be so arranged in the tool-room that anyone can find them at
once, even if he is a comparative stranger to the room, and
the system of accounting for stock must enable the store-
keeper at any time to tell who has a tool out.

As has already been stated, the best situation for the tool-
room is near the center of the shop. If, however, there is
any great difference in the rate of wages paid to the men, it
will be cheaper to place the tool-room nearer to the machines
at the section of the shop where the most skilful and expen-
sive labor is situated. Frequently, however, the highly paid
workers have one or more helpers, so our rule will again have
to be modified. It is the workmen who have no helpers, and
yet are highly paid that should be nearest the tool-room.

1. To keep track of the tools within a tool-room in such
a way that anyone can find them is not so difficult a task aa

294

RECORD OF EQUIPMENT 295

it might seem. In a plant like a textile establishment which
has really little if any need for hand tools, the tool-room is
small and unimportant, and almost any system suffices that
makes it possible to know who have possession of the tools ;
but in a machine shop where there are a great many small
tools and attachments for machines, hammers, chisels, drills,
wrenches, taps, dies, gauges, and a hundred other different
kinds of instruments constantly in greater or less demand, a
convenient system must not depend upon the memory of any
one or of several individuals.

Two systems are in general use to keep track of materials
in machine shops :

(a) The tools may be arranged in classes and groups. By
this scheme, all cutting tools are kept together in the cutting
class, the machine cutters being put in a group by them-
selves, while the hand-cutting tools are grouped separately.
Within these groups the tools are arranged according to their
use. If they bore holes, they go under boring cutters; if
they cut grooves or fiat surfaces, they are plane-cutters.
They are also arranged in order of sizes. One firm carries
out this scheme to a very elaborate extent.

The tools in the tool-room should be kept in good condi-
tion by the tool-shop. The workmen should be relieved of
the necessity of grinding or caring for them. There should
always be a large supply of the more commonly used tools,
and at no time should a workman fail to obtain a tool when
wanted. There should be no red tape necessary to get a tool.
The workman should be held responsible for a tool after he
has received it, but should not be put to any unnecessary
trouble to get it.

According to the plan outlined, accuracy in record and
availability for use can be achieved by stamping on the tools
their proper letters, so that one, even a stranger, need only
look for the drawer or compartment bearing the same letters ^
in order to put them away in their proper place.

296 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

(b) The other scheme is to classify tools by numbers in-
stead of by letters or any 'mnemonic sign. According to this
plan, every tool is indexed, and a person desiring a particu-
lar one, turns to the index, finds its number, and goes to the
corresponding case or drawer. There is little difference in
the principles of the two schemes. Both permit the tools
most generally used to be stored in convenient j^laces, and
they also keep all tools of the same class together.

Quite as important as being able to find the tools in the
tool-room is the ability to tell where the tool is in the shop.
Many tools are used intermittently, and numerous duplicates
are unnecessary. Large wrenches are required on big jobs,
but even the largest shops do not need to have many dupli-
cates, provided the tool-room clerk is able to tell where a tool
is at any time. A good device is to give the workman a set
of brass checks stamped with his number, so that the tool
clerk may put a check in place of the tool which the work-
man has secured. This check acts as a receipt for the tool,
and is not to be returned to the workman unless he delivers
the tool to the clerk. If a workman calls for a tool not on
hand, the tool clerk can promptly tell who in the shop has
it. The workman may then borrow the tool, or leave his
check with the toolkeeper, get the other man's check and
exchange it for the tool. The second workman might also go
directly to the first man and exchange a check for the tool.
The next time the first workman goes to the tool-room he can
exchange this check for his own.

By this simple scheme shops can keep track of all tools
while out of the tool-room. With the check system, work-
men can be made to deliver all borrowed tools before they
permanently leave the plant, because they can be compelled
to return a full complement of checks before they will be
given a clearance paper from the tool-room.

The system indicates who has any particular tool out at
9jiy time, but it does not show how many tools any particular:

RECORD OF EQUIPMENT 297

workman has. If it is desirable to keep track of this, the
tool clerk can have a list of the workmen's numbers, and
enter therein the numbers of the tools each workman takes
out. There are so few advantages, however, in having this
information that it is seldom, if ever, recorded. In some
cases expensive or special tools, as a diamond-cutter, may
require a special receipt from the workman, but otherwise
the tool-room clerk can keep sufficiently close watch on the
tools a man has out by keeping record of the checks a work-
man has lost, and by noting his calls for any tools which
would be unusual for his particular work in the shop. If
the man is about to leave and has lost checks, the clerk need
merely refer to his memorandum, and insist that all other
checks be accounted for by tools. This may seem a free and
easy method for one to keep track of thousands of tools and
hundreds of workmen; but, as a matter of fact, the fine that
is attached to the loss of checks makes it unprofitable for a
man to take tools which are not extremely valuable in their
nature, and in those cases the special receipt is ample pro-
tection.

Besides keeping the tools convenient to the men and
keeping track of them in the tool-room and in the shop, the
tool department should be able to report to the management
the kinds and makes of the most serviceable and profitable
tools. A convenient and reliable scheme is to have stamped
on the shank of the tool, or in some inconspicuous part, the
date of its purchase and the cost mark; and, if it is not
already there, the name of the firm which made it. If this
plan is followed and care is taken to issue the tools under
comparison, an equal number of times, the management can
soon tell which makes are proving the most efficient and
economical. It can also determine from this record what is
stiU more important : the actual expenses connected with the
tool department and what classes of work are the most ex-
pensive users of tools.

298 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

2. The second class of equipment — patterns, jigs, tem-
plets, and other forms and guides for the workmen — are not
important in many lines of manufacturing. In many others,
however, they are used almost continuously. In some classes
of production the forms or patterns must be renewed every
year or so, not because they are worn out, nor because the
firm ceases to manufacture goods of a similar grade, but
simply because the whim of fashion has called for something
else a little different in shape or form. In the shoe industry
the question of lasts is troublesome. Some factories sell
their lasts to concerns that manufacture a cheaper or lower
grade of shoe, and hence do not cater to the more fastidious
public. Even when lasts are sold, they are sold at a loss to
the concern. Eventually every shoe manufacturer must sacri-
fice a great deal of money yearly through the discontinuance
of certain styles and the introduction of others. Great as
this loss is in total amount, it does not put a heavy burden
on any one pair of shoes, because a concern manufactures
thousands of pairs in a year, and the money expended upon
the lasts is distributed through so many pairs of shoes, that
it adds but little to the cost price of the shoe.

Other industries find patterns and forms just as essential
as does the shoe industry. An engine cannot be built with-
out using many expensive patterns and forms of various
kinds, and general machine shops rapidly accumulate a
large number of patterns. The drawing-room receives the
specifications for all contracts, and it can make possible
heavy savings in using old forms and patterns if they hap-
pen to know of previous jobs whose patterns can be adapted
to the new undertaking.

It is important for the drawing-room to know just what
patterns it has at any particular time. Few engines made
at different times are exactly alike, yet every new engine
must have a complete set of patterns, which will in all prob-
ability never be duplicated. The patterns may represent

RECORD OF EQUIPMENT 299

several thousands of dollars in labor and materials, and be
useful for only one contract. It is not to be assumed that
these patterns represent a dead loss, for, although they may
never be used again as they stand, they can frequently be
utilized for other orders by making alterations. Because
they may be adapted to other work, manufacturing firms al-
ways keep patterns, whether the work is likely to be dupli-
cated or not. If a plant has been in operation for some time,
these patterns may accumulate to embarrassing proportions,
and unless there is some system of registration for them and
the drawings which they represent, duplications and partial
duplications of these forms will constantly occur and occasion
large losses. Companies early began to develop plans for
cataloguing drawings and patterns.

3. One scheme was to classify the drawings by the num-
ber of the contract, and to list the name of each by the part
of the engine it represented. Thus, a drawing of a high-
pressure cylinder of the 121st contract would be entitled
"high-pressure cylinder," and in some less prominent place
on the sheet would be printed "Contract No. 121." The
patterns would be numbered in a corresponding manner.
The system is faulty, because the contract number gives no
intimation as to the kind of job represented. Should it
happen that the shop turns out water turbines, steam pumps,
hoisting engines, blowing engines, and marine engines, Con-
tract No. 121 might be anyone; and since patterns and draw-
ings were filed and stored in order of the number, the disad-
vantages were many, but the system had in it suggestions
for a better one.

Few, if any, contracts go through a drawing-room with-
out the chief engineer and the draftsmen knowing for whom
they are intended. Involuntarily the number of the contract
becomes associated with the purchasing firm; and the said
firm is, in nine cases out of ten, engaged in a particular busi-
ness. If the company orders a blowing engine, it is in the

300 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

iron business, and not likely to call for marine engines.
The contract numbers become attached to the firm's work,
and the firms become associated with certain classes of ma-
chinery. To the men in the drawing-room, a new order for a
blowing engine calls to mind tlie firms which have ordered
similar engines in the past, and they recall the contract
numbers which have been attached to those firms. This co-
incidence gave rise to another system of tabulating drawings
and patterns, viz. :

To classify alphabetically according to the names of the
firms who order. This system is superior to the previous
one in that it simplifies the search for drawings of machinery
of a similar type, and reduces the probability of drawings
being overlooked. To the older men in the office a firm's
name suggests the kind of machinery it is in the habit of
securing, and they involuntarily start to hunt them up when
machinery of that type is reordered. Although in a mod-
erate-sized plant the system is quite satisfactoiy, in a very-
large one it fails because new men are constantly coming in
who do not know all the ordering firms, nor remember their
characteristics. Besides, ordering firms at times radically
change their work and call for other things, so that impor-
tant drawings may be forgotten, especially if there has been
any change in the administration of the engine-building
company. The system tends to fail because men are com-
pelled to remember too many names, and too much about
past orders.

An effective system is to classify the machinery into
groups, and give each group a distinctive number. Engines
of the reciprocating marine type might all come under 600,
if simple engines their number will be 510, if compound 520,
triple expansion 530, and so on. Should the steam expan-
sion of the simple engine occur in two cylinders, its number
would be 512; by letting the units represent the number of
cylinders, a triple expansion engine with five cylinders would

RECORD OP EQUIPMENT 301

be 585. The arrangement of the cylinders over each other
determines the number of connecting-rods, piston-rods,
cranks, housings, and th© like, which the engine will require.
Frequently a five-cylinder engine will have four of the cylin-
ders arranged in pairs tandem, while the fifth will be single.
An engine of that character will have three connecting-rods,
three cranks, three sets of housings or their equivalent, three
sets of eccentric rods ; in brief, the engine will be built on a
triple basis throughout. These kinds of arrangements could
readily be indicated by the addition of decimals. Thus, if a
quadruple expansion marine engine had six cylinders ar-
ranged— two tandem, two single, two tandem — it could be
expressed 546.2112. Should there be any other characteris-
tics that were desired to be shown, it could be done by the
insertion of letters, or some other simple device. Thus,
suppose the above quadruple expansion engine had surface
condensers, they could be indicated by a letter "S" substi-
tuted for the decimal, thus 546S2112. A jet condenser would
be shown by the substitution of a letter "J" instead of the
letter "S."

A system of classification based upon this general outline
possesses the advantage of giving easy accessibility to all
kinds of machinery of any class made at any time. In ad-
dition to its application in the drawing-room, it can be used
in the pattern storage houses.

A convenient scheme for the arrangement of the patterns
is to ajDply the drawing-room classification to the placement
of the patterns in the storage shed. The drawings above
have been numbered according to a certain grouping system,
which gives characteristic numbers to each class of engines
or machinery manufactured, so that one can tell at once by
the number what an engine is like, and much about it. If
we divide up the pattern storage room on a basis of that
classification, all the patterns for the engines and engine
parts would be readily accessible. All engines, although they

S02 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

may differ widely in their design, structure, and size, have
certain parts which are in the main common, as cylinders,
steam chests, engine frames, bed plates, shafts, fly-wheels.
The patterns may be grouped either by contracts as a whole,
or by like parts of different contracts.

The first scheme has the disadvantage that patterns of
small and large parts and of dissimilar pieces are likely to

3vn<bd

PATTERN CARD

Name ef (Wtcro
p«serii*ion

PoHern rmrh of Dote Compl«1Bd

Onqtnoll/ mode 1

forOrder I 3for«d Pn BwiW.on floor Shelf 3ec+iOn

axctth of
Rattern

Ho. of Core bo<C3 Kim-thi* ftrtttm /' ''

)

NOTE

Fig. 54.— Pattern Record Card. (Front.)

be piled together at the expense of good order and of storage
space. If all the similar parts of the various machines are
grouped together, it is easier to find the same kinds of
pieces; and if the system of arrangement is made to corre-
spond to the drawing numbers, the particular patterns can
easily be located.

In addition to having the patterns accessible, it is highly
desirable that the drawing-room should know the exact con-

RECORD OF EQUIPMENT 303

difcioh of each pattern, and where it is at any time. Thia
can be accomplished by having filed in the drawing-room
cards which give the nmnber and complete history of each
pattern, showing all alterations. Copies of the card may be
kept on file in the office of the pattern storage rooms. When
the pattern is taken from storage, its card may be removed
from the usual filing drawer to another one, so that all the
patterns in the storage shed may be in one compartment,
while those in the foundry or pattern shop may be in another.
(See Fig. 54.)

If, in addition to the scheme of segregating the pattern
cards, to show those out of storage the plan to be adopted of
requiring everyone who secures a pattern to leave a receipt
countersigned by the foreman of the department to which it
goes, and of filing that receipt with the pattern card, it be-
comes a very simple matter, indeed, to trace the pattern at
any time. If any alterations have been made on the pattern,
the nature of these changes may be entered on the back of
the card, so that one will have a complete record of the pat-
tern from the time it was first constructed until it is de-
stroyed.

The principles outlined for keeping track of patterns may
be carried out for keeping track of any other kind of ma-
terial. Some concerns have adopted a filing scheme based on
the Dewey Decimal system for their technical literature.
The Engineering Experiment Station of the University of
Illinois has published several pamphlets showing how the
Dewey Decimal System of classification may be applied to
Engineering and Architectural work.^

According to the Dewey system, aU knowledge is sepa-

^ Bulletins, Nos. 9 and 13, University of Illinois Engineeringr
Experiment Station, "An Extension of the Dewey Decimal System
of Classification Applied to Engineering Industries," and "An
Extension of the Dewey Decimal System of Classification Applied
to Architecture and Building." , , ..,■

804 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

rated into ten classes, and each class is given one of the
hundreds for a number, viz. :

000, General, including Astrology, Palmistry, and Works of a
similar character.
100, Philosophy.
200, Religion.

300, Sociology and Economics, the Social Sciences.
400, Philology.
500, Natural Science.
600, Useful Arts.
700, Fine Arts.
800, Literature.
900, History.

Each of these classes is broken into nine divisions with a
tenth division for general matter in the class, and each divi-
sion is in turn separated into nine sections. The sections
are again subdivided, and the process may be carried on
indefinitely.

"To show clearly the working of the system the divisions of
Class 6 (useful arts) and the sections of Division 2 of this class
(engineering) are given.

600,

Useful Arts.

620,

Engineering.

610,

Medicine.

621,

Mechanical.

620,

Engineering.

622,

Mining.

630,

Agriculture.

623,

Military.

640,

Domestic Economy.

624,

Bridge and Roof.

650,

Communication and

625,

Road and Railroad.

Commerce.

626,

Canal.

660,

Chemical Technology.

627,

River and Harbor.

670,

Manufactures.

628,

Sanitary : Water Works

680,

Mechanic Trades.

629,

Other Branches.

690,

Building.

"It will be seen that the first digit gives the class ; the second*
the division ; and the third, the section. Thus 625 indicates Sec-
tion 5 (railroad engineering) of Division 2 (engineering) of Class 6
(useful arts). For convenience a decimal point is inserted after
the section digit. Further subdivision is indicated by digits fdl-
lowing the decimal point. For example^ 625.2 is the number indi*

RECORD OF EQUIPMENT 305

eating rolling stock; 625.23 passenger cars; 625.24 freight cars,
etc.

"Uses and Advantages of the Classification and Index. — The
decimal classification may be used to advantage in the indexing
and filing of notes and memoranda, clippings, general information,
articles in technical journals, drawings, catalogues, or books. For
this purpose the decimal system possesses certain important ad-
vantages over the alphabetical system.

"(1) It groups allied subjects. For example, suppose the alpha-
betical arrangement to be applied to a case of catalogues. The
catalogues of the various machine tools, as planers, lathes, drills,
hammers, etc., would be scattered throughout the case. With the
decimal system, on the other hand, all these catalogues would be
grouped together under the class number 621.9.

"(2) Unless an elaborate system of cross reference is used, the
alphabetical scheme is ambiguous ; in many cases there is doubt as
to what letter should be given a subject. For example, take the
item "Automatic pneumatic block signals." This might almost
equally well be indexed under A, P, B or S. With the decimal
system this item has its one number 656.256.4.

"(3) The decimal system has the advantage of flexibility and
an indefinite capacity for extension. For the indexing of books
and catalogues only the main division and sections will, in general,
be found necessary ; but for card indexes of technical literature
the most minute subdivisions must ordinarily be used. In indi-
vidual cases, the user may find that still further division is re-
quired. An extension may then be made by adding another decimal
place, and if still further subdivision is required still another digit
may be used.

"The average engineer, for example, can easily index all matter
relating to traveling cranes under the single class number 621.872.
The designer or builder of cranes may, however, have so much
matter relating to this special subject that further subdivision is
needed. By the addition of a digit, this matter may be divided
into nine groups, designated by 621.872.1, 621.872.2, etc. ; and, if
necessary, each of these maybe divided into nine new groups. ">

While this system works well for the filing of books, clip-
pings, and drawings, it has its limitations when used to ar-

^ Bulletin, No. 9, University of Illinois, Engineering Experi-
ment Station, pp. 2 to 4. ^

366 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

range contracts and patterns. Manufacturing firms, as a
rule, have specialized their work to such an extent that it is
unnecessary for them to have any general class number like
621, to let them know their contract deals with mechanical
or electrical engineering machinery. For locating patterns,
such numbers are not only unnecessary in the average shop,
but are confusing; hence, while the Dewey system of classi-
fication is excellent for filing all information which the firm
may gather from outside sources, a simple modification like
the one above suggested, may be used to advantage in cata-
loguing patterns and contracts.

4. In order to keep a sufficient record of machines, the
management should know the following:

(a) Are the machines running to their full capacity all
the time the workmen are attending to them?

(b) Are there sufficient machines to do the class of work
required by the shop?

(d) What is the rated and real capacity of the machines?
When a company purchases a machine, the salesman is

quite apt to make extravagant statements concerning the per-
formance of the device, and the apparatus often proves to be
far less efficient than one would conclude from the salesman's
representation. Manufacturers have frequently been inclined
to discredit salesmen's promises fifty to one hundred per
cent. In many instances such action is unfair to the sales-
man and to themselves, because they may not have gotten
the possibilities from the machine,'and may blame the sales-
man for misrepresentation while their own workmen are at
fault. The lack of output may be due to prejudice against
the device on the part of the workmen, who, to prevent
changes in wage rates, will not make the machine produce
to its utmost. Sometimes they feel that the output from
previous machines is sufficient, and that the new machine is

RECORD OF EQUIPMENT

307

to be considered a labor-saver, in the sense that it will save
them from exerting themselves, as formerly, in order to make
the old standard output. The old way of managing a shop
compelled the foreman to be alert to prevent machine hands
from soldiering. If the boss is familiar with all the ma-

By courtesy of The Bristol Company, Waterbury, Conn.

Fig. 55. — Record Card of a Bristol Automatic Time Re-
corder Applied to Two Paper Machines, Showing All
Idle Time in Twenty-four Hours.

chines in operation, he can prevent idleness to a very great
extent; but it is possible to loaf on machine work, even with
the best and most knowing overseers. A number of ingeni-
ous devices have been j)ut on the market to eliminate depen^
dence upon the foreman's knowledge. These automatic-
recording devices keep track of the power used per hour, of
temi^eratures, and of pressures at all times. In fact, one can
have almost anything recorded. ^V^ith them one can tell from

308 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

the power and time records whether the machine is using up
all the power demanded by its maximum capacity, and what
is the extent of its idle time during any period.

The following figures and illustrations give an idea of the
application of recording instruments to industrial conditions.
Fig. 55 shows an application of it to two paper machines.
Every time either of the machines stopped, the recording pen
for the machine dropped toward the periphery of the card,
and the duration of the idleness is shown by the length of
the notch. Figs. 56 and 57 show the temperature records,
"the chart No. 661, of December 15, 1908, was drawn
shortly after the installation of this thermometer on our
feed-water system. That of April 13, 1909, is from the same
instrument. A comparison of these two will give you an
idea of the improvement it is possible to affect in feed- water
temperature, with the aid of a sensitive, accurate recorder."^

One great advantage of all these recording instruments is
that no matter where the operations are carried on, the re-
cording apparatus can be concentrated at any point. In this
way it is possible to have all the records in the office of the
foreman or superintendents while they are being made.
Many plants, however, do not have the instruments so placed,
because if they are going to get the greatest efficiency out of
their men, it is well to let the workers see just what kind
of a record they are making while on duty. The foremen
should be around to see the men from time to time, so there
is no great advantage gained by having the gauges gathered
together in his office, or that of some superior official. The
superintendent of a large plant has other duties than watch-
ing gauges in operation. His clerk should gather the records
and call his notice to any bad reports or unusual showings
which need attention. He will thus know what to investi-
gate, and should not be troubled with the records when

1 Bulletin, No. Ill, The Bristol Company, September, 1909.

•«

•^

Clj

<4H

Ssi

?s.

«3

•4->

-<J

»-i

sp^ bi)

/ E

^ /

lil

«*-!

...

-fj

'-H

.go

810 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

everything is going as well as present methods make possi-
ble. His time under those conditions can be better em-
ployed in improving the methods in operation.

If the records kept show that machines are always run-
ning at their full capacity, it is fair to expect them to make
their promised output. Not only is it necessary to see that
machines are making their promised outputs, but care should
be taken to see that they make it consistently throughout
long lapses of time. Many firms keep daily records of ma-
chine outputs in such a way that a person can tell at a glance
how the department is running. These records are frequently
used in connection with other data. Mr. H. L. Gantt in
1903 published a paper, entitled "A Graphical Daily Bal-
ance in Manufacture, ' ' to show how a daily balance scheme
can be used to facilitate getting work turned out by a de-
partment. The advantages of his daily balance scheme, as
he presented it, are that it aids the foreman by showing him
at a glance what is to be done, and what he has already^done
on any particular lot. In order to show this he present^s
some tables indicating his balance sheet scheme, which are
here reproduced. (See Fig. 58. )

One will observe that this is merely a plan for keeping
track of unfinished material, not unlike some previously
described, but the scheme can be used to determine whether
the plant is over or under supplied with any kind of ma-
chines. Indeed, Mr. Gantt, in his note at the bottom of the
right of Fig. 58, calls attention to the fact that it can be so
used: "This table shows the way F^g. 58 would look if the
works were short of frame-drilling capacity." Any one of
the schemes used to keep track of partly finished goods would
likewise show any deficiencies in machine equipment, pro-
vided the foreman could prove it was not due to lack of labor
or to his own insufficiency.

After a firm is satisfied that its machinery is working to
its full promised capacity, and has demonstrated that it has

RECORD OF EQUIPMENT

311

sufficient machinery on hand to do the work required, the
next question, and an exceedingly important one, is to de-»
termine which machines are really the most economical to

N. L. CANTT
Ordar No. 77
1 6 Enginn, N. V. C.

A. L. CO. PRODUCTION SHEET

Schenectady Works, Machine Shop No. 1

PART.

FRAMES

RAILS.

Pur. Ord.; Skttch:
Pat. or Card Dr. No.

OPERATION "g
ti

■s

•6

1
in

-d
I

•rf

■d

n
Si

•d
0

To Be Bciiun.

To Be Finished.

No. Wanted. is

■ 5

■s

»5

Na Finished, s' %
a H

Q (2

i 3

o (2

t 1

1 ^

Q (2

0 |2

5 .2

« 26 4 34 4. 14

< 30 » 26 41*

.rr: > ^b ^ «

.. .. J 30 6 ti

tuu

This side shows 1 record as ictually kept

Fig. 58.— Records Showing Output of Machines. Adapted from
a Paper Given by H. L. Gantt, "A Graphical Daily Balance
in Manufacture," Transactions American Society Mechanical
Engineers, vol. xxiv, pp. 1322-36, Figs. 290, 291.

have. A large textile establishment once. introduced a num-
ber of costly looms which were guaranteed to turn out a cer-
tain quantity of cloth within a given period. In testing the
looms it was found that they made the output with little

312 THE PRINCIPLES OF .INDUSTRIAL MANAGEMENT

apparent effort, but when it came to examining the output
records of the departments, it was found that the looms were
not nearly so efficient as they were expected to be. It was
found on investigation that the loss in output was due to lost
time taken in repairing and looking after the machinery.
The manager then kept a record of the amount of repairs and
of lost time on the looms, and found to his amazement that
they were not nearly so efficient as the ones that had been
discarded. Upon further investigation he found that the
operators were unfamiliar with the electrical starting devices,
and through their ignorance were causing the firm a loss of
hundreds of dollars. Many concerns keep records of this
type for every machine in their plant, and they find the
records are helpful in determining what machines are best
suited to their purposes, as well as being useful in determi-
ning the repair and depreciation charges. (See Fig. 59.)

Within recent years, some important textile concerns
have adopted an effective inventory scheme. A plan is made
of every department of the establishment, and on it is indi-
cated every machine or piece of equipment within the sec-
tion of the plant represented. All pieces in the department
are numbered, no matter how small, and are shown in the
drawing. (See Fig. 60. ) In addition a separate record is
kept containing an accurate description of the machines, and
also information relating to their prices, dates of purchases,
rates of depreciation, from whom purchased, by what power
driven, when and how disposed of, and the amount realized
on their disposal. (See Fig. 69. )

The drawings alone present considerable information.
They show the dimensions of the plant or department) and
indicate the exact position of every piece of equipment, while
on the same sheet with the drawing is tabulated a brief de-
scription of the machines, the number of each, the methods
of driving them, and a description of the motive power. A
more detailed statement of these items is entered on type-

o
q:
o
o

h
z
u

>•
oc
tiJ

I
o
<

•
z

«5

o:
<

■^Vt. ^.^0

e
•

tic

1 1

*2 J

111

•

^ r
■"■si
5 i

t
1

8
t

1.1

<
ki

«E
3*

1 \

a. c

1 1 1 1

•
i.
0

. c

i iJ

__J

«
tf

314 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

written sheets, which give full descriptions of the inventory.
Whenever a change is made in the equipment, the drawing
is altered, the table is corrected to correspond with the
change, and the descriptive part of the record is corrected
in order to give accurate indication of the new conditions
within the plant.

Accuracy and fairness in keeping these inventory records
are essential. Insurance companies prefer, at times may
even insist, that they be kept by disinterested appraising
firms in order to. guarantee absolute trustworthiness. It is
not, however, an imperative necessity for an outsider to keep
such records ; because fallacies may be detected from internal
evidence. Save in unusual cases, machinery is acquired by
purchase, a bill of sale is always given with such transac-
tions, and the machine-manufacturing companies keep their
sales records. In case of any dispute the insurance com-
panies can refer to these records; and thus, by making
proper depreciation allowances, obtain a close approximation
of the value of the machinery from an independent source.

This inventory record possesses a number of advantages.
Aside from its importance in case of fire, it keeps the firm
thoroughly informed as to the exact status of all its posses-
sions within the plant. The true value of the equipment,
both in total and in individual items, is never obscured.
Even if. the records are not accurately kept they serve as a
convenient basis for tracing out the original value. It fre-
quently happens that the assured will, unless he possesses
such a record, be unable after a fire to tell just what his
losses are. Many times he o\'^erlooks important items in his
loss statements to the insurance companies,, and does not
recover amounts to which he- is justly entitled. Insurance
companies feel quite justified in paring down claims when-
ever their validity is in any doubt, and there are often pos-
sibilities for disagreement where no such record is kept.
Seldom, indeed, after large conflagrations, are adiustments

«0

.•"

^::t

III
1

1
i

1
1

la
5^

t--

(J
<

•

■

•

■<

;

•

■

« «

S
1^

s
*

■

kwnttH It^iMf

t»,ntHIC~.J>r

816 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

made without friction, and always at the expenditure of con-
siderable sums of money. These sums far exceed the cost of
installing a proper fire inventory system, while the after-
expenditures are never satisfactory.

If fire never occurs in the plant, the additional work re-
quired to keep this type of inventory is so small compared
with the advantages gained by having a chart of the equip-
ment constantly in view that it is well worth the trouble to
have it, if only to help keep the other records, as shown in
Fig. 59, which refers to output and repairs on machines.
The plat record shows at a glance all the things that the firm
owns, while the other figure gives the details of each individ-
ual item. It is an ideal inventory record for machinery.

INDEX

Ability, individual, 212, 213.
Alabama, iron and steel products

of, 9.
Alleghany River, steel plants on,

14.
American Tobacco Co., 62-66.
Apprenticeship systems, 208-211.
Artificial light, 155.
Automatic records, 307-310.

sprinkler, 145, 147.

stoker, 174, 175,

Baldwin Locomotive Works, ap-
prenticeship system of,
208-210.
locations of, 24, 25.

Banking facilities, 26, 33.

Beef packing, 66-68, 109-114.

Belts, power distribution by, 177,
178.

Bin, double, 268.
single, 268.

Boiler division of a ship-build-
ing plant, 126, 127.

Bonus, as labor reward, 229, 230.
cash, 47, 229, 230.

Boston, as an oil port, 59.

Bristol recording cards, 307, 309.

Budget system record of mate-
rials, 276, 277.

Building, free, for factory loca-
tion, 46.

Buildings, arrangement and con-
struction of, 26, 28, 33,
90, 96, 104, 106, 109,
118, 123, 132, 134, 153,
162,
fire protection of, 140-152.

Bush Terminal Co., 144.

Buying, location influenced by
facilities for, 26,

By-products, industry, 66, 67,
84,-85, 86, 101, 109-114.

Carnegie Steel Company, 12,

29.
Cash bonus, 47,
Child labor, 199-201.
Clock, recording, 242.
Combustion, direct, 166.

indirect, 168.
Concentration, 49-70.
Concrete, reinforced, 145.
Condenser, 169, 175, 176.
Connecticut, as producer of small

articles, 8.
Consolidations, 51.
Contract record slip, 247-249.

wage payment, 219.
Cotton, 15, 17.
Credit, facilities for, 26, 33.
Crosby-Fiske " Handbook of Fire

Protection," 137, 140, 146,

149.

317

318

INDEX

Daily time card, 247.

Day wage payment, 215-218.

Decimal system, Dewey, 303-305.

Department, fire, 36-38.

Dewey decimal system, 303-305.

Direct combustion gas engine,

165, 166.
Distribution, 4.
Districts, industrial selection of,

5.
Drawings, 294.
Drop-box system of time-keeping,

241.

Economizer system, 174.
Efficiency, determination of, 240-

261.
Electricity, p'ower distribution

by, 178, 179.
Emerson diflferential wage pay-
ment system, 228, 229.
Employee, qualities of, 239.
Employment, bureau of, 235,

256.
Engine, gas, 166-168.
hydraulic, 164.
indirect combustion, 168.
reciprocating, 168.
steam, 168.
turbine, 168, 169.
Engineering Experiment Station,
University of Illinois, 303.
Engines, 75, 127-169.

building of. 75, 127-131.
Environment, economic, 3.
Equipment of plant, 3, 82, 294-

316.
Expansion space, influence of,
_ ...y ^ on plant location, 26, 33.

'■■ ifi-

Female labor, 196-199.

Finished goods, 281, 291-293.

Fire alarms, 37, 150.
auxiliaries, 37.
causes of, 137-140.
departments, influence and

value of, 36, 37.
escapes, 152.
hazards, 137, 138.
powers, 139.
precaution, influence of, 135-

152.
protection of buildings, 140-
146.
Fire-fighting, facilities for, 26,

36-38.
Fire Underwriters' Association

of United States, 147.
Flour milling, 107, 140.

Gallery type of shop-building,

130-133, 154.
Gantt bonus system of labor

reward, 229, 230.
Gary, steel plant at, 14, 29, 41,

56, 95.
Gas engine, 166-168.

manufacture of, 136.
General Electric Company, 208.
Goods, finished and unfinished,

281-293.
Gravity tanks, 147.

Halsey premium wage system,

219-225.
Hazards, fire, 137, 138.
Heat as a comfort for workers,

153.
Heating, methods of, 155-158.
Hull division of a ship-building

plant, 125, 126.
Hydraulic engine, 164.
machinery, 164.
pressure, 179, 180,

INDEX

319

Illinois, first in production of

six articles, 8.
Inboard time system, 240, 241.
Index record, 264, 265, 273.
Industrial selection of districts, 5.
theory of location, 3-23.
United States, 5-9.
Industries, analytical, 84, 101-
114.
assembling, 83, 115-134.
by-product, 84, 85, 101, 109-

114.
continuous, 83.
direct-producing, 116.
distribution of, 8-23.
indirect producing, 116.
non-by-product, 84-91, 101.
synthetical, 83-100.
Insurance, rates of, 26, 36-38.
Integration, 49-70.
Interchangeable part, 79.
Inventories, perpetual, 268-270.
single versus double bin
plan of, 268.
Inventory of properties of U. S.

Steel Corporation, 52-56.
Iron production in Alabama, 9.
in Pennsylvania, 8.

Jacksonville as an oil port, 59.

Knowledge, accurate, as basis of
judgment, 235.

Labor, bonus reward for, 229,
330.

child, 199-201.

comparison of male and fe-
male, 196-199.

employment bureau for, 235,
256.

in manufacturing, 14, 15, 26.

problem in plant management,
4.

Laborers, classes of, 196-213.
highly skilled, 205-207.
semi-skilled, 207.
unskilled, 201, 202.
Lackawanna Steel Company, 12.
Land, free, 45.
Lasts, 298.
Layouts, plant, 83-100.

influence of . fire precaution
on, 135-152.
Legal requirements, influence of,
on manufacturing, 25, 35.
Lighting, 153-155.
Localization, causes for indus-
trial, 10, 11.
Location, 24-44.
city, 41-43.
country, 39-41.
industrial theory of, 3-23.
influence of market on, 26.
restrictive ordinances and, 26,

35.
suburban, 43, 44.
taxes and, 26, 35.
Locomotive, building of, 75, 127-
131.

Machine shop structure, 128-132.
Machinery, arrangement of, 306.
hydraulic, 164.

influence of, on steel industry,
14.
Machines, classified according to

laborers, 203-205.
Managers, duties of, 183.
Manufacture, daily balance in,

310.
Manufacturing for general stock,
282-293.
for specific contract, 282-293.
influence of, on plant location,

26, 29.
steel, 14,

320

INDEX.

Manufacturing, textile, 15.

toy, 80.
Mains, high-pressure, 37.
Male labor, 196.

Markets, influence of, on indus-
trial location, 10, 11.
Marquette, Michigan, iron ore in,

12.
Massachusetts, shoes and textiles

in, 8.
Materials, direct, 262.
indirect, 262.
raw, 4, 12-21, 262-280.
Meat-packing, 66-68, 109-114.
Mill, structure of, 107, 108, 140.
Minneapolis, flour manufactures

in, 22.
Minnesota, flour production of, 9.
Monongahela River, plant loca-
tion on, 14, 29.
Montana, raw wool in, 9.
Motors, group, 178.

individual, 178, 179.
Multiple part tag, 249-252.

National Biscuit Company, 68.

National Fire Protective Associ-
ation, 145, 149.

New Jersey, dyeing and silk
manufacturing in, 8.

New London as an oil port, 59.

New York, first in production of
29 articles, 8.

Non-production order tag, 249,
250.

North Carolina, textiles in, 9.

Ohio, first in production of 3
articles, 8.

Oil products, records of manu-
factured, 282-291.
refining of, 135, 136.

Order, production, 283.
Ordinances, restrictive, and loca-
tion, 26, 35.
Organization, departmental, 192-
195, 283.

functional, 188-192.

military, 183-187.

types of, 183-195.
Outboard time system, 240, 241.
Output, record of, 307.

Packing, meat, 66-68, 109-114.

Pattern, shop, 127.

Patterns, storage arrangement

for, 298-303.
Pennsylvania, carpet and iron

manufacturing in, 8, 9.
Philadelphia, as an iron and steel
distribution center, 11.
as a textile center, 24.
high-pressure mains in, 37,
38.
Pianos, making of, 116, 117.
Pipe lines, 5.

Pittsburg, importance of, 11, 12.
relative decline of, in steel pro-
duction, 13, 92.
Plans, filing of, 306.
Plant, by-product, 66.
equipment of, 81.
ideal situation for, 39-48.
inventory record of, 312, 315,

316.
layout of, 83-100.
efi'ect of fire precaution on,
135-152.
location of, 24-38.
records of, 316.
ship-building, 124-134.
boiler division of, 126.
hull division of, 125, 126.
structure of, 140-150.

INDEX

321

Portland, 59.
Power, 4.

distribution of, by air pres-
sure, 179.
by belts, 177.
by electricity, 178.
by hydraulic pressure, 179,

180.
by steam pipes, 177.
fires caused by, 139.
gas as a source of, 166.
importance of, in all manufac-
turing, 163.
in steel manufacturing, 14.
motive, division of shipyard,

127.
records of, 307.
-water, 163-165.
Premium plan for wage pay-
ment, 219, 223-225.
Pressure, air, 179.
high, mains, 37.
hydraulic, 179, 180.
tanks, 148.
Production order, 283.

tag, 244, 252.
Profit sharing, 219, 220.
Providence as an oil port, 59.
Purchasing department, 263,

264.
Purifiers, water, 170.

Questions to be asked of a for-
mer employer, 237, 238.
to be asked of a prospective
employee, 235.

Eaw materials, 4.

as factor in determination

of location, 12-21.
budget plan of recording,

276, 277,

Raw materials, inventories of,
268-270.
purchasing department for,

263. ■
record of, 262-280.
Receiving department, 266-268.
Record, automatic graphic, 310.
equipment for, 299.
of finished and unfinished

goods, 281-293.
of machines, 306.
of patterns, 301-303.
of plans, 306.
of tools, 294-299.
oil product, 282-291.
output, 307.

perpetual inventory, 268-270.
power, 307.
spoiled work, 255, 256, 258-

261.
tag of stores, 268.
temperature, 307.
voucher, 273-276.
workers, 233-261.
Recording clock, 242.
Refineries, oil, 135-291.

sugar, 102-105.
Rent, influence of, on location,

26, 35.
Repair shops, influence of, on lo-
cation, 26, 32.
Requisition plan for store record,

274-276.
Reward, labor, bonus system of,

229, 230.
Rhode Island, rank of, in pro-
duction, 5.
silverware production of, 8.
Richmond, as an oil port, 59.
Robert Gair Co., 144.
Rowan wage-payment system,
223-225.

322

INDEX

Savannah as an oil port, 59.
Saw-tooth plan of lighting, 154.
Schuylkill Valley, iron and steel

in, 12.
Selling, 3, 26.

Ship-building, plant for, 124-134,
Shipping department, 291.
Shipyard, motive power division

of, 127, 128.
Shoe manufacturing, 119-122,
287, 298.
building for, 123, 124.
building required for, in Mas-
sachusetts, 8.
Shop, gallery type of, 130-133,
154.
machine, 128.
Shops, repair, 26, 32.
Silk, manufacturing of, 18.
Singer Manufacturing Co., 68.
Skylights, 154.
Softeners, water, 170.
South Carolina, textile produc-
tion in, 9.
Southern states, manufacturing

development of, 20.
Space, adequate for workers, 153,

159.
Specialization, 4, 71-80.
Sprinkler, automatic, 145, 146.
Standard Oil Co., 58-61.
Standardizing department, 263,

264.
Steam, comparison of, with gas
as power, 168.
economy of plant, 169-176.
engine, 168.

power distribution by, 177.
turbines, 168.
Steel, new plants, 14.

plants, as affected by source of
raw materials, 12.

Steel, growth of, 14.

influenced by labor, 14.
influenced by market, 12.
production in Alabama, 9.
Steel manufacture, building for,
95.
labor problem in, 14, 92-94,
97.
Stoker, automatic, 174, 175.
Store room, arrangement of ma-
terial for, 272, 273.
location for, 131-133, 295.
record of goods in, 264-266.
Stores, thieving of, 273.
Sugar, refining of, 102-105.
building for, 105, 106.
record of manufactured
products of, 283, 284.
Superheater, 174.

Tag production order, 244, 252.
record of employees, 249-252.
of stores, 268.
Tanks, gravity, 147.

pressure, 148.
Taxes, exemption from, 46.

influence of, on location, 26,
35.
Taylor differential wage pay-
ment, 225-229.
Temperature, record of, 307.
Testing department, 264.
Textiles, a specialized business,
72.
in non-by-product industries,

91.
labor and, 15.

location of plants for, 18, 20.
manufacturing of, 86-89.
plant required for, 89-91.
production of, in Massachu-
setts, 8.

INDEX

323

Textiles, in North Carolina, 9.
Thermostats, 150.
Thieving, store, 273.
Time record, advantages of, 242-
244.
book method of, 244-246.
call number method of, 241.
clock method of, 242.
drop-box method of, 241.
outboard form of, 240.
Toilet rooms, 153-160.
Tool room, management of, 294-

299.
Tools, proper position of, 131-
133, 295.
record of, 294-299.
Towne profit-sharing plan, 219,

220.
Toys, manufacture of, 80.
Trussed Concrete Steel Company,

145.
Turbines, steam, 168.

water, 164.
Turner Construction Co., 144.

Underwriters', Fire, Association

of United States, 147.
Unfinished goods, 281-291.
Union Railroad, 29.
United States, industrial, 5-9.
United States Steel Corporation,
29, 40, 52, 58, 69, 95.
properties of, 63-56.

Ventilation, 153.

methods of, 157-159.

state law concerning, 159.
Voucher record plan, 273-276.

Wage payment, 214.
contract plan of, 219.
day plan of, 215-218.

Wage payment, Emerson dif-
ferential plan of, 228,
229.
Gantt bonus system of, 229-

230.
Halsey premium plan of, 219,

223.
piece plan of, 216-219.
profit-sharing plan, 219, 220.
Rowan premium plan of, 223—

225.
Taylor differential plan of,

225-228.
Taylor's timing system of, 230-
232.
Wash rooms, 153-160.
Water power, 163-165.

influence of, on location of
milling industries, 22.
purifiers, 170.
softeners, 170.
supply, as affecting insurance,

37.
turbines, 164.
Westinghouse Electric and Man-
ufacturing Co., 210.
Wilmington, as an oil port, 59.
W"indows, 154.

sawtooth, 154.
Wool, ten leading states in the
production of, 15.
ten leading states in the man-
ufacture of, 16.
Work, spoiled, record of, 255,

256, 258-261.
Works, Baldwin Locomotive, 24,

25.
Workers, record of, 233-261.
contract slip, 247-249.
daily time card, 247.
tag scheme, 249-252.
time book, 244-246.

This book is DUE on the last date stamped below

University of California

SOUTHERN REGIONAL LIBRARY FACILITY

Return this material to the library

from which it was borrowed.

A 000 506 075 1

.%^

!i!l

fiiiiriiii

i!l';V!jiij)Mii!:'(;!ia:f'5|

'';'l:'i-l!Mii.

I|,,.,;... . ,.|;

I"'

ill it ii jllhi 1 1 V' li Jii'!':

IK •'!!'!

<);r*'

1 ■! t

l!i!!li!i|ii

•I!!

iiK,H,,

Uni

Internet Archive Audio

Featured

Top

Images

Featured

Top

Software

Featured

Top

Books

Featured

Top

Video

Featured

Top

Mobile Apps

Browser Extensions

Archive-It Subscription

Save Page Now

Full text of "The principles of industrial management"

See other formats